Judge: Douglas W. Stern, Case: 22STCV10400, Date: 2022-09-01 Tentative Ruling

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Case Number: 22STCV10400    Hearing Date: September 1, 2022    Dept: 52

Tentative Ruling:

Cross-Defendants Nile Niami and Castillian Pride LLC’s Demurrer to Cross-Complaint

Cross-defendants Nile Niami and Castillian Pride LLC demur to all seven causes of action alleged in the cross-complaint by cross-complainants Patrick Cheh and Above the Boulevard, LLC (Above).

(1) Quiet Title

Cross-complainants fail to allege sufficient facts for quiet title.  “The purpose of a quiet title action ‘is to finally settle and determine, as between the parties, all conflicting claims to the property in controversy, and to decree to each such interest or estate therein as he [or she] may be entitled to.’ ”  (Deutsche Bank National Trust Co. v. Pyle (2017) 13 Cal.App.5th 513, 524.)  Quiet title concerns “adverse claims to the title of the plaintiff against which a determination is sought.”  (CCP § 761.020(c).)

            The cross-complaint alleges no adverse or competing claims to the subject property at 2165 Castilian Drive, Los Angeles, CA 90068.  It instead alleges, “Niami financed the purchase of the Subject Property with title placed in Cheh’s LLC, Above the Blvd.”  (¶ 13.)  It further alleges cross-defendants “are now seeking to put the Subject Property up for sale and thereby are seeking to retain the proceeds of the sale for themselves and thereby deprive Cheh and Above the Blvd their rightful share of the proceeds.”  (¶ 23.)

            There is no dispute or adverse claim of title to the property.  The cross-complaint alleges Above owns title to the property.  It alleges no adverse claims by Niami or Castillian Pride.  The dispute is not over ownership of the subject property.  It is over entitlement to the proceeds from a future sale or refinancing of the property.

(2) Fraud – Intentional Misrepresentation

Cross-complainants fail to allege sufficient facts for fraud.  Intentional misrepresentation requires: (1) a misrepresentation of fact; (2) knowledge of falsity; (3) an intent to defraud; (4) justifiable reliance; and (5) resulting damages.  (Ryder v. Lightstorm Entertainment, Inc. (2016) 246 Cal.App.4th 1064, 1079.)  “[F]raud must be pled specifically” by “pleading facts which show how, when, where, to whom, and by what means the representations were tendered.”  (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645, internal quotes omitted.) 

The cross-complaint fails to specifically allege the first element: a misrepresentation of fact.  “[A]ctionable misrepresentations must pertain to past or existing material facts. …   Statements or predictions regarding future events are deemed to be mere opinions which are not actionable.”  (Cansino v. Bank of America (2014) 224 Cal.App.4th 1462, 1469.)

The cross-complaint alleges three representations: (1) that Niami would give Above title to the subject property in order to pay a debt he owed to Cheh (¶ 32); (2) in September 2021 “that within five (5) years, upon either sale or refinancing of the Subject Property,” Niami would pay his debt to Cheh (¶ 33); and (3) “that Niami would pay for all expenses for the upkeep of the Subject Property” (¶ 35).  None of these representations constitute representations of actual or existing facts.  They are statements about the future. 

Moreover, the cross-complaint fails to specifically allege that any of those representations are false.  Instead, it alleges Niami did buy the subject property and put title in Above’s name.  (¶ 13.)  The representation that Niami would sell or refinance the property to pay Cheh within five years of September 2021 cannot yet be false.  Niami still has four years to follow through, which would make the representation true.  And nowhere does the cross-complaint allege Niami did not pay for the property’s expenses and upkeep. 

Finally, the cross-complaint only alleges representations by Niami, not cross-defendant Castillian Pride.  The cross-complaint does not allege Niami’s authority to speak on behalf of Castillian Pride and does not allege Niami’s representations were made on behalf of Castillian. 

(3) Promissory Estoppel (against Niami only)

            The cross-complaint fails to allege sufficient facts for this cause of action.  “The elements of a promissory estoppel claim are ‘(1) a promise clear and unambiguous in its terms; (2) reliance by the party to whom the promise is made; (3) [the] reliance must be both reasonable and foreseeable; and (4) the party asserting the estoppel must be injured by his reliance.’ ”  (US Ecology, Inc. v. State of California (2005) 129 Cal.App.4th 887, 901.)  “[U]nder the doctrine of promissory estoppel, ‘A promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise.’ ”  (Kajima/Ray Wilson v. Los Angeles County Metropolitan Transp. Authority (2000) 23 Cal.4th 305, 310.)

            The cross-complaint alleges, “Niami made a clear and unambiguous promise to Cross Complainant Cheh that Niami would pay Cheh the sums he owed Cheh from their past business dealings in Interlight Pictures by giving Cheh, through his LLC, Above the Blvd, ownership of the Subject Property and that Cheh would be repaid what he is owed through either the sale or refinancing of the Subject Property within a period not to exceed five (5) years.”  (¶ 44.)  It further alleges, “Cheh and Above the Blvd have been injured by their reasonable reliance on Niami’s promises as Niami now seeks to deprive Cheh of his control and ownership of Above the Blvd.”  (¶ 46.)

These allegations are insufficient for promissory estoppel as alleged by Above.  The cross-complaint alleges Niami made only a promise to Cheh—not to Above. 

Cheh, meanwhile, fails to allege facts showing his reliance on Niami’s promise caused him damages or that injustice can only be avoided by enforcing the promise.  The alleged promise was that Niami would pay his debt to Cheh via sale or refinancing of the subject property.  But Cheh does not allege anything he did in reliance on that promise.  “[G]iving Cheh, through his LLC, Above the Blvd, ownership of the Subject Property” (¶ 44) does not involve any act in reliance by Cheh. 

Cheh alleges no facts showing that, in reliance on Niami’s promise, he ended up in a worse position than if Niami never made the promise.  Regardless of the promise, Niami allegedly owed money to Cheh.  If Niami owed money to Cheh and did not pay it, Cheh may assert a cause of action for that on some other theory.  These factual allegations fail to show detrimental reliance or that enforcing the promise is necessary to avoid injustice.   

(4) Breach of Implied Covenant of Good Faith and Fair Dealing

Cross-complainants fail to allege sufficient facts for this cause of action.  “Every contract contains an implied covenant of good faith and fair dealing providing that no party to the contract will do anything that would deprive another party of the benefits of the contract. …  Although breach of the implied covenant often is pleaded as a separate count, a breach of the implied covenant is necessarily a breach of contract.”  (Digerati Holdings, LLC v. Young Money Entertainment, LLC (2011) 194 Cal.App.4th 873, 885.)

The elements of this cause of action are the same as for breach of contract, except with breach of the implied covenant instead of breach of an express contract term.  Thus, the plaintiff must allege: (1) a contract; (2) plaintiff’s performance or excuse for nonperformance; (3) defendant prevented plaintiff from receiving the benefits under the contract; (4) in doing so, defendant did not act fairly and in good faith; and (5) defendant’s conduct harmed plaintiff.  (See CACI No. 325.)

The cross-complaint fails to allege facts showing that defendants prevented cross-complainants from receiving the benefits of any contract.  It alleges cross-defendants “breached the implied covenant of good faith and fair dealing by attempting to take control of both the LLC, Above the Blvd and therefore ownership of the Subject Property and take from Cross Complainants what is rightfully theirs.”  (¶ 51.) 

The cross-complaint alleges three agreements.  First, “a management services agreement, wherein Cheh granted” Castillian Pride “the authority to manage the Subject Property on behalf of Cheh’s LLC, Above the Blvd.”  (¶ 17.)  Second, “[a]n irrevocable proxy agreement wherein Cheh irrevocably granted a proxy to Castillian Pride to vote 100% of Cheh’s interest in Above the Blvd.”  (¶ 18.)  And third, “[a]n Option to Purchase Agreement between Cheh and Castillian Pride wherein for the absurd nominal amount of $1.00 Cheh would sell 100% of his interest in Above the Blvd. to Castillian Pride.”  (¶ 19.)

The cross-complaint fails to allege cross-defendants did anything to deprive Cheh of the benefits of these agreements.  What cross-complainants allege is not that cross-defendants deprived Cheh of the benefits of the agreements—it is that the agreements were bad deals for Cheh. 

The cross-complaint alleges, “When Cheh entered these agreements (Exhibits B-D) he had no idea he was signing over control of his LLC, his ownership interest in its sole asset, the Subject Property and the security for the now more than $1,000,000 debt Niami owed to him all in exchange for the nominal consideration of ONE DOLLAR ($1.00)!  Nobody in their right mind would do such a thing.”  (¶ 20.)  Cheh thus alleges he did not understand the agreements he made and that it is enforcing the agreements—not breaching them or interfering with his benefits under them—that harmed him.  That does not constitute a cause of action for breach of the implied covenant of good faith and fair dealing. 

(5) Common Count – Unjust Enrichment (against Niami only)

            Cross-complainants fail to allege sufficient facts for this cause of action.  “The only essential allegations of a common count are ‘(1) the statement of indebtedness in a certain sum, (2) the consideration, i.e., goods sold, work done, etc., and (3) nonpayment.’  [Citing Witkin.]”  (Farmers Ins. Exchange v. Zerin (1997) 53 Cal.App.4th 445, 460.)

            Rather than indebtedness of a certain sum, the cross-complaint alleges Niami owed “$640,000 plus interest, which had with interest exceeded $1,000,000” (¶ 10), a “more than $1,000,000 debt” (¶ 20), or an amount “over the sum of one million dollars” (¶ 54). 

The cross-complaint also fails to allege the consideration, i.e., why Niami owes cross-complainants any money in the first place.  The cross-complaint makes only the conclusory and vague allegation that Niami “owed Cheh” money arising “from their business relationship with Interlight Pictures” (¶ 10) and that “Cross Defendant Niami received a benefit, namely the sum of money Niami owed Cheh from past business dealings in Interlight Pictures” (¶ 54).  A “business relationship” or “business dealings” fails to constitute a factual allegation that Cheh provided Niami something of value that created a debt.

(6) Partition by Sale of the Real Property

            Cross-complainants fail to allege sufficient facts for partition.  “A co-owner of real or personal property may bring an action for partition.”  (LEG Investments v. Boxler (2010) 183 Cal.App.4th 484, 493.)  A complaint for partition must allege “[a]ll interests the plaintiff has or claims in the property” (CCP § 872.230(b)) and all others’ interests in the property (CCP § 872.230(c)). 

            Cross-complainants do not allege they and cross-defendants are co-owners of the subject real property.  They allege Above owns the entire subject property.  (¶ 13.)  There can be no partition of a property solely owned by a single entity.

(7) Declaratory Judgment

            Cross-complainants fail to allege sufficient facts for declaratory relief for two related reasons.  First, declaratory relief is “unnecessary and superfluous” when the issues involved are already “fully engaged by other causes of action.”  cause of action for declaratory relief “already [are] fully engaged by other causes of action,” “declaratory relief [is] unnecessary and superfluous.”  (Hood v. Superior Court (1995) 33 Cal.App.4th 319, 324.)  Second, when a court sustains a demurrer to other causes of action, “a demurrer is also properly sustained as to a claim for declaratory relief which is ‘wholly derivative’ of” the other causes of action.  (Ball v. FleetBoston Financial Corp. (2008) 164 Cal.App.4th 794, 800.)

            The cross-complaint’s cause of action for declaratory relief involves issues fully engaged by the other causes of action.  The seventh cause of action for declaratory judgment alleges: a dispute over who controls Above the Board, LLC (¶ 67); that cross-defendants owe cross-complainants money (¶¶ 68-70, 74); and that cross-complainants are entitled to the subject property (¶¶ 69, 75, 76).  These issues arise from the same facts and involve the same issues as the other causes of action.  Even if it were not superfluous, this cause of action for declaratory judgment would fail because it relies on the other causes of action.

            Given the totality of the allegations and the allegations regarding the “disputed” ownership of Above and the promised future performance, it may be that Cross-Complainant is capable of articulating a claim for declaratory relief.  However, given the present state of the Cross-Complaint and the fact that leave to amend is granted on all claims, the Court sustains the demurrer with leave to amend on the declaratory relief claim as well.

Disposition

            The demurrer by cross-defendants Nile Niami and Castillian Pride LLC to all seven causes of action alleged in the cross-complaint is sustained with 30 days’ leave to amend.

Tentative Ruling:

Plaintiff Above the Boulevard LLC’s Motions to Compel Defendant Patrick D. Cheh and Defendant Blossom.Space Inc. to Respond to Form Interrogatories.

Order Compelling Responses

Plaintiff Above the Boulevard LLC moves to compel defendants Patrick D. Cheh and Blossom.Space Inc. to respond to form interrogatories.  When a party fails to timely respond to interrogatories, the propounding party may move for an order compelling responses.  (CCP §§ 2030.290(b).)  Failure to timely respond waives any objections to the interrogatories.  (CCP §§ 2030.290(a).)

Defendants Cheh and Blossom Space Inc. concede they did not timely serve responses to the form interrogatories.  Defense counsel states he “inadvertently forgot to e-mail them to Plaintiff’s counsel” (Nakatsu Decl., ¶ 6) and did not realize the mistake until being served with these motions (Id., ¶ 7).  Defendants served purported responses on July 22, 2022.  (Nakatsu Decl., ¶ 7.)

Those responses, however, are insufficient for two reasons.  First, they do not respond to all the interrogatories.  For example, Blossom Space’s response did not answer Nos. 3.1-3.7 or 17.1, while Cheh’s response did not answer No. 2.5(b)-(c), 2.7(c)-(d), or 2.11(b).  (Nakatsu Decl., Ex. 1; Supp. Alperin Decls., Ex. H.)    

Second, the responses are not properly verified.  “Unsworn responses are tantamount to no responses at all.”  (Appleton v. Superior Court (1988) 206 Cal.App.3d 632, 636.)  Both responses include a verification with the following text in the body:

I have read and know the contents of the foregoing:

I am a party to this action.  I have read the above-described document and know its contents.  The matters stated in the document are true of my own knowledge, except as to those matters which are stated on information and belief, and as to those matters, I believe them to be true.

I declare under penalty of perjury, pursuant to the laws of the State of California, that the foregoing is true and correct.

Executed on 6/23/2022, at Los Angeles California.

[signature]

Patrick Cheh

(Nakatsu Decl., Ex. 1; Supp. Alperin Decls., Ex. H.)

            These verifications are insufficient.  The space after “I have read and know the contents of the foregoing:” is blank.  As a result, there is no “above-described document.”  As for Blossom Space, the verification has no indication that it is made on behalf of that entity rather than Patrick Cheh as an individual.

Moreover, the footers of each verification feature the wrong page number, wrong party, and wrong discovery requests.  Cheh’s response to form interrogatories is 22 pages, but the footer to the attached verification says, “- 6 – [¶] Blossom Space’s Response to Requests for Admissions.”  (Nakatsu Decl., Ex. 1; Supp. Alperin Decls., Ex. H.)  Meanwhile, Blossom Space’s response to form interrogatories is four pages, but the footer to the attached verification says “- 7 – [¶] Cheh’s Response to Requests for Admissions.”  (Nakatsu Decl., Ex. 1; Supp. Alperin Decls., Ex. H.) 

These verifications fail to constitute a sworn statement that either defendant read the contents of the responses to the form interrogatories and verified that those responses are true.  Instead, the responses include generic verifications to different discovery responses that were apparently copied and attached to the form interrogatory responses.

Because the responses are not properly verified, they do not constitute responses.  Plaintiff is entitled to an order compelling responses to its form interrogatories.

Sanctions

In its motions, plaintiff moves for $2,640 in sanctions against Cheh and his counsel and for $705 in sanctions against Blossom Space and its counsel.

Sanctions are mandatory against a party who unsuccessfully opposes a motion to compel interrogatory responses, unless the court finds the party acted with substantial justification or that other circumstances make the sanction unjust.  (CCP § 2030.290(c).)

Defendant Patrick Cheh and defendant Blossom Space Inc. unsuccessfully opposed plaintiff’s motions.  The court finds they did not act with substantial justification and sanctions are just under the circumstances.  That defendants’ counsel was busy or not fastidious is not adequate justification for failing to timely respond in the first place or for ultimately serving responses that do not answer all the interrogatories and do not include proper verifications.

The court finds $2,640 and $705 constitute the reasonable expenses plaintiff incurred as a result of defendants’ misuse of the discovery process.

Disposition

Plaintiff Above the Boulevard LLC’s motion to compel defendant Patrick D. Cheh’s responses to form interrogatories is granted. 

Defendant Cheh is ordered to serve verified responses without objections to form interrogatories – general, set one, within 30 days.  Defendant Cheh and his counsel David Y. Nakatsu are ordered to pay plaintiff Above the Boulevard LLC $2,640 in sanctions within 30 days.

Plaintiff Above the Boulevard LLC’s motion to compel defendant Blossom Space Inc.’s responses to form interrogatories is granted. 

Defendant Blossom Space Inc. is ordered to serve verified responses without objections to form interrogatories – general, set one, within 30 days.  Defendant Blossom Space Inc. and its counsel David Y. Nakatsu are ordered to pay plaintiff Above the Boulevard LLC $705 in sanctions within 30 days.