Judge Donald F. Gaffney, Case Walters v. Randall 2022-10-26 Tentative Ruling

Judge: Donald F. Gaffney, Case: Walters v. Randall, Date: 2022-10-26 Tentative Ruling

TENTATIVE RULING:

For the reasons set forth below, Defendants’ demurrer to the seventh cause of action for breach of contract is OVERRULED, and the demurrer to the ninth cause of action for fraud is SUSTAINED with leave to amend. Defendants’ Motion to Strike is DENIED.

A. Legal Standard for Demurrer

A demurrer tests the sufficiency of whether the complaint states a cause of action.  (Hahn v. Mirda (2007) 147 Cal.App.4th 740, 747.)  When considering demurrers, courts read the allegations liberally and in context--any defects must be apparent on the face of the pleading or via proper judicial notice.   (Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.)  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.  (Cal. Civ. Proc. Code §§ 430.30, 430.70.)  The only issue a demurrer is concerned with is whether the complaint, as it stands, states a cause of action.  (Hahn 147 Cal.App.4th at 747.) A demurrer is also proper where the pleading is uncertain, ambiguous, and unintelligible. (Cal. Civ. Proc. Code § 430.10(f)).

B. Seventh Cause of Action for Breach of Contract

The elements of a breach of contract cause of action are: “(1) the 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.” (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186.) A plaintiff may plead the terms of a contract according to their legal effect. (McKell v. Washington Mut., Inc. (2006) 142 Cal. App. 4th 1457, 1489.)

“Just as the covenant of habitability is implied in a lease, the covenant of good faith and fair dealing is implied in all contracts, including a lease.” (Fairchild v. Park (2001) 90 Cal.App.4th 919, 927.) “[T]he implied covenant is a supplement to an existing contract, and thus it does not require parties to negotiate in good faith prior to any agreement.” (McClain v. Octagon Plaza, LLC (2008) 159 Cal.App.4th 784, 799.) “The covenant is read into contracts and functions ‘as a supplement to the express contractual covenants, to prevent a contracting party from engaging in conduct which (while not technically transgressing the express covenants) frustrates the other party's rights to the benefits of the contract.’ ” (Thrifty Payless, Inc. v. The Americana at Brand, LLC (2013) 218 Cal.App.4th 1230, 1244.) “The covenant also requires each party to do everything the contract presupposes the party will do to accomplish the agreement's purposes.” (Ibid.) “A breach of the implied covenant of good faith is a breach of the contract [Citation omitted] and “breach of a specific provision of the contract is not ... necessary” to a claim for breach of the implied covenant of good faith and fair dealing.” (Ibid.)

A trial court should not sustain a demurrer when the plaintiff has stated a cause of action under any possible legal theory. (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1358.)

Under these standards, the court finds that Plaintiff has sufficiently alleged the legal effect of a contract for Defendants to have sufficient notice of the basis of Plaintiff’s claims—i.e., the lease agreement between Plaintiff and Defendants in which Plaintiff would pay rent in order to be able to reside in Defendant’s units. Plaintiff alleges that the written lease agreement set forth the identity of the parties, the date, the monthly payment amount, and other terms. (Complaint, ¶ 137.) However, as Plaintiff’s allegations make clear, the basis of Plaintiff’s breach of contract claim is not based on any specifically agreed upon term between the parties, but the implied covenant of good faith and fair dealing, which “supplements” the express terms of a contract. (Thrifty, supra, 218 Cal. App. 4^th at 1244.) Plaintiff has sufficiently alleged uninhabitable conditions that frustrate the purpose of the lease agreement—i.e., if true, could reasonably constitute a breach of the implied covenant of good faith and fair dealing. A “breach of a specific provision of the contract is not ... necessary” to a claim for breach of the implied covenant of good faith and fair dealing.” (Ibid.) “A breach of the implied covenant of good faith is a breach of the contract.” (Ibid.) Taking all of Plaintiff’s allegations as a whole, the court finds that Plaintiff has sufficiently alleged a basis for a claim for a breach of the implied covenant of good faith and fair dealing, which is a breach of contract claim.

The demurrer to this cause of action is OVERRULED.

C. Ninth Cause of Action for Fraud

The elements of fraud are: “(a) misrepresentation, false representation, concealment, or nondisclosure; (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Charnay v. Cobert (2006) 145 Cal.App.4th 170, 184.) Fraud must generally be pleaded with specificity. (Small v. Fritz Companies, Inc. (2003) 30 Cal.4th 167, 184.) “The particularity demands that a plaintiff plead facts which show how, when, where, to whom, and by what means the representations were tendered.” (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1469.) As one court explained, “this statement of the rule reveals that it is intended to apply to affirmative misrepresentations.” (Alfaro (2009) 171 Cal. App. 4th at 1384.) One of the purposes of the specificity requirement is “notice to the defendant, to ‘furnish the defendant with certain definite charges which can be intelligently met.” (Id.)

Defendants argue that Plaintiff has not sufficiently pled a cause of action for fraud against them. The court agrees.

Specifically, it is unclear from Plaintiff’s allegations what misrepresentations serve as the basis for Plaintiff’s alleged reliance. Plaintiff alleges that had Plaintiff known about the truth of Defendants’ misrepresentations, she would have never entered into a lease agreement with Defendants—i.e., that she relied on alleged concealment in entering into the lease agreement. However, her fraud claim does not make that clear. Rather, she alleges that she began residing at the property beginning July 2020. (Complaint, ¶ 20.) However, all of the alleged misrepresentations appear to have occurred after Plaintiff had already moved in:

The alleged misrepresentation set forth in paragraph 151(a) states that Randall made misrepresentations and concealed information “while addressing complaints from Plaintiff concerning water intrusion in her Unit.” (Complaint, ¶ 151(a).) That necessarily presupposes that Plaintiff was already residing in her unit and, therefore, had already entered into the lease agreement prior to this alleged misrepresentation.

The remaining alleged misrepresentations occurred between July 2020 and May 2021 relating to remediation of mold, water intrusion, and the effects of mold on Plaintiff’s health. (Complaint, ¶ 151(a)-(3).) These allegations do not clearly state that these misrepresentations and concealment occurred before Plaintiff leased her unit with Defendants. Rather, the strong implication is that these representations all occurred after the alleged water intrusion in Plaintiff’s unit, after she had already moved in.

Further, Plaintiff alleged in the complaint that her reliance was a “delay in prosecution.” (Complaint, ¶ 157.) There are no specific allegations why prosecuting this action earlier rather than later caused Plaintiff further damage (e.g., there is no allegation that Defendants’ conduct wrongfully induced her to file her complaint after the statute of limitations had run, etc.) As such, the court finds that Plaintiff’s allegations are vague, conclusionary, and uncertain in terms of the basis of Plaintiff’s fraud claim.

Finally, the court agrees with Defendants that the extent of Plaintiff’s claims appears to be nonperformance (i.e., a breach of contract). (See Tenzer v. Superscope, Inc. (1985), 39 Cal. 3d 18, 30 ["[S]omething more than nonperformance is required to prove the defendant's intent not to perform his promise."]. As such, the court finds that Plaintiff has insufficiently pled the intent element for fraud.

The demurrer to this cause of action is SUSTAINED with leave to amend.

Should Plaintiff desire to file an amended complaint that addresses the issues in this ruling, Plaintiff shall file and serve the amended complaint within 30 days of service of the notice of ruling.

Defendants to give notice.

D. Motion to Strike

A motion to strike punitive damages is properly granted where a plaintiff does not state a prima facie claim for punitive damages, including allegations that defendant is guilty of oppression, fraud or malice.  (Turman v. Turning Point of Cent. California, Inc. (2010) 191 Cal.App.4th 53, 63; Cal. Civ. Code § 3294(a); See also, Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255 (“In order to survive a motion to strike an allegation of punitive damages, the ultimate facts showing an entitlement to such relief must be pled by a plaintiff”).)

 “Malice” is conduct intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on with a willful and conscious disregard of the rights or safety of others.  (Cal. Civ. Code, § 3294(c)(1).)  Despicable conduct is “conduct which is so vile, base, contemptible, miserable, wretched or loathsome that it would be looked down upon and despised by ordinary decent people.  Such conduct has been described as ‘having the character of outrage frequently associated with crime.’”  (Tomaselli v. Transamerica Ins. Co. (1994) 25 Cal.App.4th 1269, 1287.)  “‘Punitive damages are proper only when the tortious conduct rises to levels of extreme indifference to the plaintiff’s rights, a level which decent citizens should not have to tolerate.’  [Citation.]”  (Lackner v. North (2006) 135 Cal.App.4th 1188, 1210.)  

Defendants argue that Plaintiff has not sufficiently pled conduct that rises to the level of malice, oppression, or fraud and that punitive damages are unavailable for the causes of action that plaintiff pleads. The court disagrees.

Specifically, in the context of breach of implied warranty of habitability cases, “[t]o support an award of punitive damages on the basis of conscious disregard of the safety of others, a plaintiff ‘must establish that the defendant was aware of the probable dangerous consequences of his conduct, and that he willfully and deliberately failed to avoid those consequences.’” (Penner v. Falk (1984) 153 Cal. App. 3d 858, 867.) In Penner, the court of appeal held that a plaintiff sufficiently pled allegations to support an award of punitive damages:

“The pleadings sufficiently allege facts setting forth long existing physical conditions of the premises which portend danger for the tenants.” (Id.)

“The pleadings also set out that respondents knew of those conditions for up to two years, had power to make changes, but failed to take corrective and curative measures.” (Id.)

“If proven, these allegations would support an award of punitive damages.” (Id.)

Accordingly, the Penner court held that the trial court committed an error and reversed the trial court’s order granting a motion to strike punitive damages allegations from the plaintiff’s complaint. (Id.)

Like Penner, here, the plaintiff sufficiently pled facts “setting forth long existing physical conditions of the premises which portend danger for the tenants” and that the Defendants knew of those conditions, had the power to make changes, but failed to take corrective and curative measures. “If proven, these allegations would support an award of punitive damages.” (Penner, 153 Cal. App. 3d at 867). Under Penner, that is generally sufficient to support an award of punitive damages.

Defendants have not challenged the sufficiency of Plaintiff’s habitability claims, which serve as an appropriate basis for punitive damages. (See Cal. Civil Code §1942.5(h)(2) (a lessor who violates this section shall be liable to the lessee for “punitive damages…”). Because Plaintiff has sufficiently alleged causes of action for which punitive damages are available, at the pleading stage, Plaintiff’s allegations are appropriate.

The motion is DENIED.

Defendants to give notice.