Superior Court of California 

County of Los Angeles – West District  

Beverly Hills Courthouse / Department 205 

 

 

MOVING PARTY: Defendant Margan Sadeghi 

 

RESPONDING PARTY: Plaintiff 1210M, LLC  

 

BACKGROUND 

This case involves a landlord-tenant dispute.  Panach Corp. is a small hair salon business with fewer than nine employees which is owned and operated by Defendant Margan Sadeghi.  Panach entered into a lease with the Craig Babin Trust (the “Lease”) for commercial property located at 1210 Montana Avenue, Unit B, Santa Monica, California 90403 (the “Premises”).  Sadeghi executed a personal guaranty whereby she guaranteed the prompt payment of all rents and other sums payable by Panach.   

In November 2020, Plaintiff 1210M, LLC acquired the development including the Premises and succeeded the Craig Babin Trust as landlord under the Lease.  Plaintiff alleges a single claim for money due on the personal guaranty against Sadeghi in the amount of $48,828.50 representing commercial rent for November 2020 through December 2022.   

On January 24, 2023, the Board of Supervisors of the County of Los Angeles adopted a Resolution Further Amending and Restating the County of Los Angeles Covid 19 Tenant Protections (“Tenant Protections Resolution”).  (Request for Judicial Notice (“RJN”), Ex. A.)  Section VI.D of the Tenant Protections Resolution states that a landlord of commercial property is “Prohibited from enforcing a Personal Guarantee for rent incurred by the commercial Tenant during the Protected Time Period.”  (Id. at p. 16 §VI.D.)  

“‘Personal Guarantee’ means with respect to a commercial lease for a commercial Tenant who has nine (9) employees or fewer, a term that provides for an individual who is not the Tenant to become wholly or partially personally liable for the rent, charges or other sums required to be paid by the commercial Tenant, upon the occurrence of a default in payment.  The term ‘Personal Guarantee’ includes the execution of a separate instrument that would otherwise qualify as a Personal Guarantee if it were included within the terms of the underlying commercial lease.”  (Id. at p. 7, §IV.I.)   

“‘Protected Time Period’ means March 4, 2020 through January 31, 2022, during which a commercial Tenant was unable to pay rent due to financial impacts related to Covid-19.”  (Id. At pp. 7-8 §IV.I.)    

This hearing is on Sadeghi’s motion for judgment on the pleadings.  Sadeghi argues that Section VI.D of the Tenant Protections Resolution permanently bars Plaintiff from seeking to enforce her personal guaranty.   

REQUEST FOR JUDICIAL NOTICE 

Sadeghi requests judicial notice of (1) “Resolution of the Board of Supervisors of the County of Los Angeles Further Amending and Restating the County of Los Angeles Covid-19 Tenant Protections Resolution” dated January 24, 2023, and (2) “Resolution of the Board of Supervisors of the County of Los Angeles, Hereafter to be Referred to as ‘The County of Los Angeles Covid-19 Tenant Protections Resolution,’ Further Amending and Restating the Executive Order for an Eviction Moratorium During the Existence of a Local Health Emergency Regarding Novel Coronavirus (Covid-19)” dated September 28, 2021.   

The Court grants the request pursuant to §§ 452(b) and 453.  The resolutions are regulations and legislative enactments issued by a public entity under Cal. Evid. Code § 452(b).  Pursuant to¿§¿453, the¿court must take judicial notice of any matter specified in §452 if¿a party requests it and: “(a) Gives each adverse party sufficient notice of the request, through the pleadings or otherwise, to enable such adverse party to prepare to meet the request; and (b) Furnishes the court with sufficient information to enable it to take judicial notice of the matter.” (Evid. Code § 453.) 

LEGAL STANDARD 

A defendant may move for judgment on the pleadings when the “complaint does not state facts sufficient to constitute a cause of action against that defendant.”  (Code Civ. Proc. §438(b)(1) and (c)(1)(B)(ii).)  “A motion for judgment on the pleadings may be made at any time either prior to the trial or at the trial itself. [Citation.]”  (Ion Equipment Corp. v. Nelson (1980) 110 Cal.App.3d 868, 877.)  

 “A motion for judgment on the pleadings performs the same function as a general demurrer, and hence attacks only defects disclosed on the face of the pleadings or by matters that can be judicially noticed.  Presentation of extrinsic evidence is therefore not proper on a motion for judgment on the pleadings.”  (Cloud v. Northrop Grumman Corp. (1998) 67 Cal.App.4th 995, 999 (citations omitted).)   

The standard for ruling on a motion for judgment on the pleadings is essentially the same as that applicable to a general demurrer, that is, under the state of the pleadings, together with matters that may be judicially noticed, it appears that a party is entitled to judgment as a matter of law.  (Bezirdjian v. O'Reilly (2010) 183 Cal.App.4th 316, 321-322 (citing Schabarum v. California Legislature (1998) 60 Cal.App.4th 1205, 1216).)   

DISCUSSION 

Sadeghi argues that Section VI.D of the Tenant Protections Resolution permanently prohibits the enforcement of personal guarantees of commercial leases.  The Court disagrees. 

Section VI.D of the Tenant Protections Resolution must be read in conjunction with VI.C.2 which makes clear that the ban on personal guarantees is only temporary.  Section VI.C.2 states that “[d]uring the applicable repayment period, a Landlord is prohibited from enforcing a Personal Guarantee for rent incurred by a commercial Tenant with nine (9) employees or fewer, arising from unpaid rent incurred during the Protected Time Period.”  (Ex. A at p. 15, §VI.C.2 (emphasis added).) 

“The rules of statutory construction direct us to avoid, if possible, interpretations that render a part of a statute surplusage.” (People v. Cole (2006) 38 Cal.4th 964, 980–981.)  Courts “must strive to give meaning to every word in a statute and to avoid constructions that render words, phrases, or clauses superfluous. [Citations.]” (Klein v. United States of America (2010) 50 Cal.4th 68, 80.)  The well-established principles of statutory construction “preclude judicial construction that renders part of the statute ‘meaningless or inoperative.’ [Citation.]” (Hassan v. Mercy American River Hospital (2003) 31 Cal.4th 709, 715–716.)    

Trial courts have construed this resolution as imposing only a temporary ban on the enforcement of personal guarantees.  (See, e.g., Melrose Heights LLC v. Bottlist Weho, Inc., 2022 Cal. Super. LEXIS 36392 at *32 (“Plaintiff is not entitled to enforce the personal guarantee at this time. The resolution states as follows: ‘During the applicable repayment period, a Landlord is prohibited from enforcing a Personal Guarantee for rent incurred by a commercial Tenant with nine (9) employees or fewer, arising from unpaid rent incurred during the Protected Time Period.’ (Id., ¶ VI(C)(2)(c).) Although Jarjour and Almaz are bound by the personal guarantee, Plaintiff cannot seek or enforce a judgment against them until February 1, 2023.” (Emphasis added.)) 

Accepting Sadeghi’s interpretation of Section VI.D would also render the resolution unconstitutional under the Contracts Clause.  The¿Contracts Clause¿states: “No State shall . . . pass any . . . Law impairing the Obligation of Contracts.”¿ (U.S. Const. art. I, § 10, cl. 1.)  The language of the Clause is unqualified and, in the words of Chief Justice Marshall, “establish[es] a great principle, that contracts should be inviolable.”¿(Sturges v. Crowninshield, 17 U.S. (4 Wheat.) 122, 206, 4 L. Ed. 529 (1819).)  That said, the Contracts Clause is not absolute and is subject to the police power of the state.  (Home Building & Loan Association v. Blaisdell (1934) 290 U.S. 398, 444 (“the reservation of the reasonable exercise of the protective power of the state is read into all contracts”).) 

Melendez v. City of New York (2nd Cir. 2021) 16 F.4th 992 is instructive.  There, New York had enacted a law to permanently discharge rent debts owed by guarantors of small business tenants (the “Guaranty Law”).  Unlike here, the legislative record in Melendez confirmed the legislature’s intent to permanently discharge debt.  New York City landlords sued, arguing that the Guaranty Law violated the Contracts Clause.  The trial court granted summary judgment against the landlords.  The Second Circuit reversed, concluding the trial court should not have dismissed the Contracts Clause claim.   

The Second Circuit looked to the Supreme Court’s decision in Home Building & Loan Association v. Blaisdell.  In Blaisdell, lenders challenged certain Great-Depression-era legislation that deferred a mortgagor’s obligation.  The Supreme Court rejected the challenge to the legislation because while it deferred a mortgagor’s obligations, it did not extinguish them forever.  Rather, the law assumed that when the moratorium period expired—that is, once the legislature determined the economic burdens of the Great Depression had ceased—the underlying integrity of the mortgage indebtedness was not impaired and the parties’ remedies would therefore be maintained.  (Id. at 445-446.)   

Relying on Blaisdell and its progeny, the Second Circuit concluded that the landlords had sufficiently stated a contracts clause challenge to the Guaranty Law.  Chief among the reasons for finding a valid contracts clause challenge is that the Guaranty Law is not a “temporary” or “limited” impairment of contract, “a factor critical to the Supreme Court's conclusion in¿Blaisdell¿that a state moratorium law was a reasonable means to afford economic relief during the Great Depression.¿See¿290 U.S. at 439¿(contrasting repudiation of debt, destruction of contract, or denial of enforcement, which could not be justified by police power, with “limited and temporary interpositions, which may be consistent with the spirit and purpose of¿Contracts Clause).”  (16 F.4th at 1038-1039.)   

Accordingly, were the resolution as interpreted by Sadeghi, it would violate the Contracts Clause.   

CONCLUSION 

Based on the foregoing, the Court DENIES Defendant Margan Sadeghi’s motion for judgment on the pleadings.   

 

IT IS SO ORDERED. 

 

DATED: August 22, 2023 ___________________________ 

Edward B. Moreton, Jr. 

Judge of the Superior Court