Judge: Edward B. Moreton, Jr, Case: 24SMCV03472, Date: 2024-10-22 Tentative Ruling
Case Number: 24SMCV03472 Hearing Date: October 22, 2024 Dept: 205
Superior Court of California
County of Los Angeles – West District
Beverly Hills Courthouse / Department 205
CHOTTO MATTE (BEVERLY HILLS), LLC,
Plaintiff,
v.
CANON LUXURY BUILDINGS, LLC, et al.,
Defendants.
Case No.: 24SMCV03472
Hearing Date: October 22, 2024
[TENTATIVE] order
RE:
DEFENDANT canon
luxury
buildings, llc’s
demurrer to and
motion to strike
complaint
BACKGROUND
Plaintiff Chotto Matte (Beverly Hills), LLC was a tenant in
a commercial restaurant space owned by Defendant Canon Luxury Buildings,
LLC. The parties entered into a retail
lease (“Lease”). (Compl. ¶ 16.)
Before entering into the Lease, Plaintiff claims Defendant
misrepresented that it had already secured a Conditional Use Permit (“CUP”),
which was necessary for Plaintiff to operate a restaurant at that
location. (Id. ¶¶ 9, 11.) In truth, Defendant only obtained a
“resolution” from the City which had no effect because Defendant never paid the
necessary fees and failed to ensure the Resolution was recorded. (Id. ¶¶ 13-15.) Plaintiff claims it relied on that
misrepresentation to enter into the Lease.
(Id. ¶¶ 19, 20.)
The Lease provides that Defendant would use its reasonable
efforts to obtain a CUP from the City of Beverly Hills within 12 months
following the effective date of the Lease.
(Id. ¶18.) The parties also
agreed that if Defendant failed to obtain the CUP within one year of the
effective date, Plaintiff and Defendant each would have the right to terminate
the Lease on written notice to the other.
(Id.)
On these facts, Plaintiff alleges four claims for: (1)
declaratory relief – termination of lease, (2) declaratory relief – frustration
of purpose, (3) fraudulent inducement and (4) breach of contract.
This hearing is on Defendant’s demurrer to and motion to
strike the Complaint. Defendant argues
that (1) the claims for declaratory relief fail because the positions of the
parties are now fixed, and the only issues to be adjudicated are whether either
party breached the contract and if so, the amount of damages; (2) the claim for
fraudulent inducement fails because the Complaint fails to state with adequate
specificity the allegedly fraudulent statements; the element of detrimental
reliance is controverted by the Lease, and damages have not been adequately
alleged, and (3) the claim for breach of contract fails because it does not
allege Plaintiff’s performance or excuse for nonperformance. Defendant also moves to strike the claim for
fraudulent inducement and references to the CUP as a “condition precedent”
because both are controverted by the language of the Lease.
LEGAL STANDARD
“[A] demurrer tests the legal sufficiency of the allegations
in a complaint.” (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.) A demurrer can be used only to challenge
defects that appear on the face of the pleading under attack or from matters
outside the pleading that are judicially noticeable. (See Donabedian v. Mercury Ins. Co. (2004)
116 Cal.App.4th 968, 994 (in ruling on a demurrer, a court may not consider
declarations, matters not subject to judicial notice, or documents not accepted
for the truth of their contents).) For
purposes of ruling on a demurrer, all facts pleaded in a complaint are assumed
to be true, but the reviewing court does not assume the truth of conclusions of
law. (Aubry v. Tri-City Hosp. Dist. (1992) 2 Cal.4th 962, 967.)
Further, the court may, upon motion, or at any time in its
discretion, and upon terms it deems proper, strike any irrelevant, false, or
improper matter inserted in any pleading.
(Code Civ. Proc. § 436, subd. (a).)
The court may also strike all or any part of any pleading not drawn or
filed in conformity with the laws of this state, a court rule, or an order of
the court. (Code Civ. Proc. § 436, subd. (b).)
The grounds for moving to strike must appear on the face of the pleading
or by way of judicial notice. (Code Civ. Proc. § 437.)
Leave to amend must be allowed where there is a reasonable
possibility of successful amendment. (See Goodman v. Kennedy (1976) 18 Cal.3d
335, 349 (court shall not “sustain a demurrer without leave to amend if there
is any reasonable possibility that the defect can be cured by amendment”); Kong
v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028,
1037 (“A demurrer should not be sustained without leave to amend if the
complaint, liberally construed, can state a cause of action under any theory or
if there is a reasonable possibility the defect can be cured by
amendment.”).) The burden is on the
complainant to show the Court that a pleading can be amended successfully.
(Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)
MEET AND CONFER
Code Civ. Proc. §§ 430.41 and 435.5 requires that before the
filing of a demurrer or motion to strike, the moving party “shall meet and
confer in person or by telephone” with the party who filed the pleading that is
subject to demurrer or motion to strike for the purpose of determining whether
an agreement can be reached that would resolve the objections to be raised in
the demurrer or motion to strike. (Code
Civ. Proc. §§ 430.41(a), 435.5(a).) The
parties are to meet and confer at least five days before the date the
responsive pleading is due. (Code Civ. Proc. §§ 430.41(a)(2),
435.5(a)(2).) Thereafter, the moving
party shall file and serve a declaration detailing their meet and confer
efforts. (Code Civ. Proc. §§ 430.41(a)(3), 435.5(a)(3).) Defendant submits the Declaration of Hannah
Salassi which attests the parties met and conferred by videoconference on
September 9, 2024, more than five days before Defendant filed its demurrer and
motion to strike on September 16, 2024.
This satisfies the meet and confer requirements of §§ 430.41 and
435.5.
UNTIMELY OPPOSITION
Plaintiff served its opposition on October 11, 2024. Under Code of Civil Procedure § 1005,
opposition papers are due no later than 9 court days before the date of hearing
– in this instance, by October 9, 2024.
Plaintiff offers no explanation for its late filing. The Court has broad
discretion to reject late-filed papers, and its discretion to accept such
papers should be exercised only if it finds that the offending party has either
sought leave to file late or demonstrated good cause for failing to adhere to
the applicable deadline. (Rancho Mirage
Country Club Homeowners Assn. v. Hazelbaker (2016) 2 Cal.App.5th 252,
262.) Plaintiff has done neither. The Court exercises its discretion to reject
Plaintiff’s late-filed opposition.
DISCUSSION
Declaratory Relief
Defendant argues that Plaintiff’s claims for declaratory
relief fail because only past wrongs are involved. The Court agrees.
“Declaratory relief operates prospectively, serving to set
controversies at rest. If there is a controversy that calls for a declaration
of rights, it is no objection that¿past¿wrongs¿are also to be redressed; but there is no basis for¿declaratory¿relief¿where only¿past¿wrongs¿are involved. Hence, where there is an accrued
cause of action for an actual breach of contract or other wrongful act,¿declaratory¿relief¿may¿be
denied.” (5 Witkin, Cal. Procedure (5th ed. 2008)
Pleading, § 869, p. 284, italics added; see also
Osseous Technologies of America, Inc. v. Discovery Ortho Partners LLC (2010)
191 Cal.App.4th 357, 366.)
Here, only past wrongs are involved. Plaintiff alleges it issued a termination
notice to Defendant on June 27, 2024.
(Compl. ¶ 26.) Plaintiff also
alleges Defendant responded by giving notice that Plaintiff’s right to
possession of the premises was terminated, and Defendant was entitled to
recover rent for the full ten-year term.
(Id. ¶ 27.) The positions of the
parties are now fixed. The only issue that remains is whether either (or both)
of the parties breached the Lease by their actions, and how much, if any,
damages should be awarded.
There are no allegations in the complaint that would suggest
that declaratory relief will regulate future conduct by the parties. (Watson v. Sansone (1971) 19 Cal.App.3d 1
(holding declaratory relief improper “where nothing remains to be done but the
payment of money, and where no declaration of future rights and obligations is
sought, necessary, or proper.”); Ermolieff v. R.K.O. Radio Pictures (1942) 19
Cal.2d 543, 545-549 (“[C]ourts may provide declaratory relief under section
1060 if the relief sought would also govern the future conduct of the
parties.”)
The parties have already done what declaratory relief is
intended to avoid -- Plaintiff has repudiated its obligations under the
contract; Defendant has invaded any right to possession, and both parties claim
the other has committed wrongs. (Travers
v. Louden (1967) 254 Cal.App.2d 926, 931 (Declaratory relief “serves to set
controversies at rest before they lead to repudiation of obligations, invasion
of rights or commission of wrongs.”).)
Declaratory relief serves no purpose here – damages are the sole and
complete remedy available to Plaintiff.
Accordingly, the Court sustains the demurrer to the first and second
causes of action for declaratory relief.
Fraudulent Inducement
Defendant argues that Plaintiff’s claim for fraudulent
inducement is subject to demurrer on three grounds: First, Plaintiff fails to allege fraud with
particularity. Second, the
misrepresentation specifically alleged is controverted by the CUP, which is
incorporated by reference to the Complaint.
Third, the Complaint fails to adequately allege justifiable reliance and
damages. The Court agrees on the last
ground.
“The elements of a cause of action for fraud are
misrepresentation (false representation, concealment, or nondisclosure),
scienter, intent to defraud, justifiable reliance, and resulting damage.” (Olson v. Cohen (2003) 106 Cal.App.4th 1209,
1217.) Every element of a claim for
fraud must be pled factually and specifically.
The policy of liberal construction of pleadings will not be invoked to
sustain a defective pleading for fraud.
(Hill Transp. Co. v. Southwest Forest Industries, Inc. (1968) 266
Cal.App.2d 702, 707.) “The particularity
requirement necessitates pleading facts which show how, when, where, to whom,
and by what means the representations were tendered.” (People ex rel. Allstate Insurance Company v.
Discovery Radiology Physicians, P.C. (2023) 94 Cal.App.5th 521, 548.)
Here, Plaintiff alleges that a Mr. Bohbot said a CUP had
been issued by the City of Beverly Hills on July 8, 2021. (Compl. ¶ 11.) Defendant argues that this misrepresentation
is contradicted by Exhibit 2 to the Complaint which shows that a CUP was
actually issued on July 8, 2021. But
Exhibit 2 to the Complaint is a resolution, not a CUP. Exhibit 2 does not contradict the alleged
misrepresentation.
Defendant also argues that Plaintiff has failed to allege an
intent to defraud, i.e.,
Mr. Bohbot knew the statement was false when he made
it. Mr. Bohbot’s intent may be inferred
from his actions. He claimed a CUP had
been issued on July 8, 2021, but Defendant had only secured a resolution, not a
CUP. It may be the case that Mr. Bohbot
was confused about the distinction between a resolution and a CUP, but that is
an argument for another day, and not proper for a demurrer.
Notwithstanding, the Court agrees with Defendant that the
Complaint fails to allege detrimental reliance.
The terms of the Lease expressly and unambiguously provide that
Defendant was to acquire the CUP within twelve months. (Ex. 3 to Compl., §2.1.) If Plaintiff acted in reliance on Mr.
Bohbot’s statement that the CUP had already been obtained, there would be no
reason for a term giving Defendant twelve months to obtain one. Plaintiff cannot have justifiably and
reasonably relied on a representation that is countermanded by the Lease.
The Complaint also fails to allege damages with
specificity. Plaintiff has not alleged
that it is otherwise ready to open for business, and the absence of a CUP is
preventing it from doing so, resulting in a loss. Moreover, Plaintiff has not alleged that if a
CUP has not been properly obtained, one cannot be obtained prior to any
expected date of opening. “A plaintiff
asserting fraud by misrepresentation is obliged to…establish a complete causal
relationship between the alleged misrepresentations and the harm claimed to
have resulted therefrom. This requires a plaintiff to allege specific facts not
only showing he or she actually and justifiably relied on the defendant’s
misrepresentations, but also how the actions he or she took in reliance on the
defendant’s misrepresentations caused the alleged damages.” (Rossberg v. Bank of America, N.A. (2013) 219
Cal.App.4th 1481, 1499.)
For these reasons, the Court sustains the demurrer to
Plaintiff’s third cause of action for fraudulent inducement.
Breach of Contract
Defendant argues that Plaintiff’s final claim for breach of
contract is likewise subject to demurrer because Plaintiff has not alleged
performance or excuse for nonperformance.
The Court agrees.
In order to sufficiently allege a claim for breach of
contract, Plaintiff much allege its performance or excuse from
nonperformance. (D’Arrigo Bros. of
California v. United Farmworkers of America (2014) 224 Cal.App.4th 790 799
(breach of contract claim requires (1) existence of the contract, (2)
plaintiff’s performance or excuse from nonperformance, (3) defendant’s breach,
and (4) the resulting damages to the plaintiff).)
The Complaint does not allege that Plaintiff either
performed its obligations under the contract (it paid the monthly rent due
under the lease) or was excused from such performance (the absence of the CUP
prevented it from operating its business).
Accordingly, the Court also sustains the demurrer to the breach of
contract claim.
CONCLUSION
For the foregoing reasons, the Court sustains the demurrer
with 20 days’ leave to amend, and denies the motion to strike as moot.
IT IS SO ORDERED.
DATED: October 22, 2024 ___________________________
Edward B. Moreton, Jr.
Judge of the Superior Court