Judge: Elaine Lu, Case: 21STCV41814, Date: 2023-01-27 Tentative Ruling

Case Number: 21STCV41814    Hearing Date: January 27, 2023    Dept: 26

Superior Court of California

County of Los Angeles

Department 26

Procedural Background

On November 12, 2021, Plaintiff St. John Armenian Apostolic Church Hollywood, California (“Plaintiff”) filed the instant breach of lease action against Defendant Divine Food and Catering, LLC (“Defendant”).  On June 28, 2022, Plaintiff filed the operative First Amended Complaint (“FAC”) against Defendant.  The FAC asserts two causes of action for (1) Breach of Lease, and (2) Account Stated.

On August 2, 2022, Defendant filed the instant demurrer and motion to strike.  On January 13, 2023, Plaintiff filed oppositions to the demurrer and motion to strike.  On January 20, 2022, Defendant filed a consolidated reply.

Allegations of the Operative Complaint

            The FAC alleges that:

            “Plaintiff is a church under the Western Diocese of the Armenian Church of North America (the ‘Western Diocese’) and is located at 1201 North Vine Street in Los Angeles, California 90038.”  (FAC ¶ 8.)

            “In or about March of 2003, the Western Diocese, for the benefit of Plaintiff, purchased the ground lease of a property located at 1219 North Vine Street, Los Angeles, California 90038 (the ‘1219 Vine Property’).”  (FAC ¶ 9.)

            On October 22, 2018, Plaintiff brought an unlawful detainer against Defendant to remove Defendant from the 1219 Vine Property.  (FAC ¶ 10.)  During the unlawful detainer action, Defendant raised the existence of a written lease agreement with Plaintiff dated May 1, 2009. Plaintiff contested the validity of the written lease agreement.  (FAC ¶ 10.)  The unlawful detainer action proceeded to trial on January 18, 2019.  At the conclusion of the trial, the trial court found that the May 2009 Lease was valid and entered judgment in favor of Defendant.  (FAC ¶ 10.)  The trial court’s judgment was affirmed on appeal in July 2021 and a remittitur was issued on October 4, 2021.  (FAC ¶ 11, Exh. 2.)

            Pursuant to the May 2009 lease, Defendant is required to pay $15,000 per month in rent.  (FAC ¶ 10, 12, Exh. 1.)  “Defendant has failed to pay its monthly rental obligations of $15,000 under the May 2009 Lease between the dates of June 1, 2009 and May 31, 2021. Defendant has paid a total of $180,000 for the months of June 2021 through May 2022. It has not paid any other arrearages or rents due under the May 2009 Lease.”  (FAC ¶ 12.) 

            “On or about June 1, 2022, Plaintiff served a 30-day notice to cure or quit asking Defendant to provide proof of insurance for every year it has occupied the property. This is a requirement under the terms of the May 2009 Lease.”  (FAC ¶ 13, Exh. 3.)

Request for Judicial Notice

            In opposition, Plaintiff requests that the Court take judicial notice of the following documents:

A.    The Unlawful Detainer Complaint Plaintiff filed against Defendant on October 22, 2018, and entitled, St. John Armenian Church, et al. v. Divine Food and Catering, LLC, et al., Case No. 18STCV02144 (“UD Action”)

B.     The full January 18, 2019, Reporter’s Transcript of Proceedings in the underlying UD Action bench trial before Judge Hammock

C.     The full January 22, 2019, Reporter’s Transcript of Proceedings in the underlying UD Action bench trial before Judge Hammock

D.    Plaintiff’s 30-Day Notice to Quit to Defendant

E.     Defendant’s verified answer to the UD Complaint

As the Court may take judicial notice of court records and actions of the State, (See Evid. Code, § 452(c)(d)), Defendant’s request for judicial notice is GRANTED.  However, the Court will not take judicial notice of the truth of assertions within the Court records. (See Herrera v. Deutsche Bank National Trust Co. (2011) 196 Cal.App.4th 1366, 1375.)

Legal Standard

Demurrer Standard 

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. (Blank v. Kirwan (1985) 39 Cal 3d 311, 318.) No other extrinsic evidence can be considered (i.e., no “speaking demurrers”). (Ion Equipment Corp. v. Nelson (1980) 110 Cal.App.3d 868, 881.)

A demurrer for sufficiency tests whether the complaint states a cause of action. (Hahn v. Mirda (2007) 147 Cal. App. 4th 740, 747.)  When considering demurrers, courts “give the complaint a reasonable interpretation, and read it in context.”  (Schifando v. City of Los Angeles (2003) 31 Cal.4th 1074, 1081.)  In a demurrer proceeding, the 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.  Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed.”  (SKF Farms v. Superior Ct. (1984) 153 Cal. App. 3d 902, 905.)  “The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.”  (Hahn, supra, 147 Cal.App.4th at 747.) 

Motion to Strike Standard

Motions to strike are used to reach defects or objections to pleadings that are not challengeable by demurrer (i.e., words, phrases, prayer for damages, etc.).  (See CCP §§ 435-437.)  A party may file a motion to strike in whole or in part within the time allowed to respond to a pleading.  However, if a party serves and files a motion to strike without demurring to the complaint, the time to answer is extended.  (CCP §§ 435(b)(1), 435(c).)

A motion to strike lies only where the pleading has irrelevant, false, or improper matter, or has not been drawn or filed in conformity with laws.  (CCP § 436.)  The grounds for moving to strike must appear on the face of the pleadings or by way of judicial notice.  (CCP § 437.)

Meet and Confer Requirement

Code of Civil Procedure § 430.41, subdivision (a) requires that “[b]efore filing a demurrer pursuant to this chapter, the demurring party shall meet and confer¿in person or by telephone¿with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” The parties are to meet and confer at least five days before the date the responsive pleading is due and if they are unable to meet the demurring party shall be granted an automatic 30-day extension.  (CCP § 430.41(a)(2).)  The demurring party must also file and serve a declaration detailing the meet and confer efforts.  (Id.¿at (a)(3).)¿ If an amended pleading is filed, the parties must meet and confer again before a demurrer may be filed to the amended pleading.  (Id.¿at (a).)  There is a similar meet and confer requirement for motions to strike.  (CCP § 435.5.)

Here, Defendant has fulfilled the meet and confer requirements.  (Yu Decl. ¶ 2.)

Discussion – Demurrer

            Defendant demurrers to the second cause of action for account stated.

Second Cause of Action: Account Stated

            Defendant contends that the second cause of action fails because (1) it is barred by law, (2) Plaintiff fails to allege an account stated, and (3) the claim is uncertain.

“An account stated is ‘an agreement, based on prior transactions between the parties, that the items of an account are true and that the balance struck is due and owing.’ ”  (Professional Collection Consultants v. Lujan (2018) 23 Cal.App.5th 685, 691 (“Lujan”).)  “The essential elements of an account stated are: (1) previous transactions between the parties establishing the relationship of debtor and creditor; (2) an agreement between the parties, express or implied, on the amount due from the debtor to the creditor; (3) a promise by the debtor, express or implied, to pay the amount due. [Citations.]”  (Leighton v. Forster (2017) 8 Cal.App.5th 467, 491.) “The action upon an account stated is not upon the original dealings and transactions of the parties. Inquiry may not be had into those matters at all. It is upon the new contract by and under which the parties have adjusted their differences and reached an agreement.”  (Gardner v. Watson (1915) 170 Cal. 570, 574.)

As to Defendant’s first contention that the matter is barred as a matter of law, Defendant relies on Moore v. Bartholomae Corp. (1945) 69 Cal.App.2d 474.  In Moore, the Court Appeal noted that “[t]he law is established in California that a debt which is predicated upon the breach of the terms of an express contract cannot be the basis of an account stated.”  (Id. at p.477.)  Though Moore addressed an appeal from a judgment after a trial, some District Court cases have dismissed account stated claims on this reasoning.  (See e.g., National Ins. Co. of Hartford v. Expert Automotive Reconditioning, Inc. (C.D. Cal., Nov. 24, 2013, No. SACV 13-0873-DOC) 2013 WL 6190591, at *3; David Rovinsky LLC v. Peter Marco, LLC (C.D. Cal., Sept. 21, 2020, No. 220CV02580ODWASX) 2020 WL 5645792, at *11.)  However, these District Court cases are non-binding as “the decisions of federal district and circuit courts. . . [are] not binding on state courts even as to issues of federal law.”  (Alan v. Superior Court (2003) 111 Cal.App.4th 217, 229.)  Moreover, California permits inconsistent pleadings and causes of action.  (Crowley v. Katleman (1994) 8 Cal.4th 666, 691 [“The plaintiff remains free to allege any and all ‘inconsistent counts’ that a reasonable attorney would find legally tenable on the basis of the facts known to the plaintiff at the time.”].)  Thus, it is not at all clear that for purposes of a demurrer, Moore serves as an absolute bar to a claim for account stated.

However, the FAC fails to allege an account stated.  The crux of an account stated claim is that it is a new agreement by which the parties have agreed to an amount owed. (Gardner, supra, 170 Cal. At p.574, [“The action upon an account stated is not upon the original dealings and transactions of the parties. Inquiry may not be had into those matters at all. It is upon the new contract by and under which the parties have adjusted their differences and reached an agreement.”].)  Here, the FAC alleges that the parties agreed to be bound by the May 2009 Lease to which they were already bound.  (FAC ¶ 26.) Thus, there was no subsequent agreement to a specific amount owed. 

Accordingly, Defendant’s demurrer to the second cause of action is SUSTAINED.

Discussion – Motion to Strike

            Defendant seeks to strike portions of the FAC that seek rent that would be barred by the applicable statute of limitations.  Specifically, the phrase “June 1, 2009” (FAC, ¶ 12, 4:12); the phrase “starting on June 1, 2009” (FAC, ¶ 17, 5:5-6); the phrase “and Civil Code § 1951.2” (FAC, ¶ 20, 5:14); the word “all” (FAC, ¶ 20, 5:15); the phrase “of up to $2,160,000.00.00” (FAC, prayer, ¶ 1, 6:24); the phrase “from June 1, 2009.” (FAC, prayer, ¶ 2, 6:25); the phrase “the sum of $2,160,000.00” (FAC, ¶ 25, 6:9); the phrase “from June 1, 2009” (FAC, ¶ 19, 6:10); the phrase “from June 1, 2009” (FAC, ¶ 19, 6:11); and the phrase “For the sum of $2,160,000.00” (FAC, prayer, ¶ 1, 7:2).

            Statute of Limitations

The statute of limitations for an action based on a written contract is four years.  (CCP § 337(a).)  Similarly, the statute of limitations for the account stated claim would be four years.  (CCP § 337(b).)  Due to the COVID-19 pandemic, the statutes of limitations for civil actions were further extended.  “Notwithstanding any other law, the statutes of limitations and repose for civil causes of action that exceed 180 days are tolled from April 6, 2020, until October 1, 2020.” (Emergency rule 9(a); See Judicial Council of Cal., Advisory Com. com., Emergency rule 9 [“Emergency rule 9 is intended to apply broadly to toll any statute of limitations on the filing of a pleading in court asserting a civil cause of action”].)

“The statute of limitations usually commences when a cause of action ‘accrues,’ and it is generally said that ‘an action accrues on the date of injury.’”  (Vaca v. Wachovia Mortgage Corp. (2011) 198 Cal.App.4th 737, 743, [internal citations omitted].)  Moreover, the limitations period begins to run from the date of loss. (Prudential-LMI Com. Ins. V. Superior Court (1990) 51 Cal.3d 674, 678– 679.)  “‘A tolling provision suspends the running of a limitations period.’ [Citation.] In other words, ‘the limitations period stops running during the tolling event, and begins to run again only when the tolling event has concluded. As a consequence, the tolled interval, no matter when it took place, is tacked onto the end of the limitations period, thus extending the deadline for suit by the entire length of time during which the tolling event previously occurred.’ [Citation.]”  (Committee for Sound Water & Land Development v. City of Seaside (2022) 79 Cal.App.5th 389, 403.) 

Here, Plaintiff filed the Complaint on November 12, 2021.  Applying the six-month tolling period  under Emergency Rule 9(a), the farthest the FAC could reach back would be to May 18, 2017.  Thus, claimed damages from June 2009 to May 18, 2017 would be barred by the statute of limitations.

In opposition, Plaintiff contends that the delayed discovery rule applies and that the claim is equitably tolled.

Delayed Discovery and Equitable Tolling

“An important exception to the general rule of accrual is the “discovery rule,” which postpones accrual of a cause of action until the plaintiff discovers, or has reason to discover, the cause of action.”  (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 807.)  “The discovery rule only delays accrual until the plaintiff has, or should have, inquiry notice of the cause of action. The discovery rule does not encourage dilatory tactics because plaintiffs are charged with presumptive knowledge of an injury if they have ‘information of circumstances to put [them] on inquiry’ or if they have ‘the opportunity to obtain knowledge from sources open to [their] investigation.’ [Citation.] In other words, plaintiffs are required to conduct a reasonable investigation after becoming aware of an injury, and are charged with knowledge of the information that would have been revealed by such an investigation.”  (Id. at pp.807–808 [internal citations omitted].)  However, “[i]n order to rely on the discovery rule for delayed accrual of a cause of action, ‘[a] plaintiff whose complaint shows on its face that his claim would be barred without the benefit of the discovery rule must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence.’  In assessing the sufficiency of the allegations of delayed discovery, the court places the burden on the plaintiff to ‘show diligence’; ‘conclusory allegations will not withstand demurrer.’”  (Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 808 [internal citations omitted].)

As to equitable tolling, “ ‘ “[f]our elements must ordinarily be proved to establish an equitable estoppel: (1) The party to be estopped must know the facts; (2) he must intend that his conduct shall be acted upon, or must so act that the party asserting the estoppel had the right to believe that it was so intended; (3) the party asserting the estoppel must be ignorant of the true state of facts; and, (4) he must rely upon the conduct to his injury.” ’ ” (Spray, Gould & Bowers v. Associated Internat. Ins. Co. (1999) 71 Cal.App.4th 1260, 1268, 84 Cal.Rptr.2d 552.) 

Here, delayed discovery and equitable estoppel are clearly inapplicable.   Though the FAC alleges that Plaintiff first learned of the May 2009 lease in the UD Action, (FAC ¶ 10), these claims are contrary to the express findings in the UD Action and the Appeal.  “As the trial court aptly summarized, the ‘statute clearly applies . . . because, in my opinion, the weight of the evidence, overwhelming weight of the evidence, is that [the St. John’s representative] signed it, and he knew it, and he was covering it up.’”  (FAC, Exh. 2; Dodd v. Citizens Bank of Costa Mesa (1990) 222 Cal.App.3d 1624, 1627, [“[F]acts appearing in exhibits attached to the complaint will also be accepted as true and, if contrary to the allegations in the pleading, will be given precedence.”].)  Thus, Plaintiff was aware of the May 2009 lease, and delayed discovery is inapplicable. 

As to any claim for equitable tolling while the appeal was pending, the FAC fails to sufficiently allege such a basis.  Nor has Plaintiff sufficiently briefed the issue for purposes of this motion.

Accordingly, Defendant’s motion to strike is GRANTED.

Leave to Amend

Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.) The burden is on the plaintiff to show the court that a pleading can be amended successfully. (Goodman v. Kennedy, supra, 18 Cal.3d at p. 348; Lewis v. YouTube, LLC (2015) 244 Cal.App.4th 118, 226.) 

Here, it is unclear whether Plaintiff can successfully amend the complaint.  However, this is the first time that a complaint has been sustained against Plaintiff’s complaint. Therefore, the court finds it is proper to allow Plaintiff an opportunity to cure the defects discussed in this order. (See Goodman v. Kennedy (1976) 18 Cal.3d 335, 349; Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1037.)   

CONCLUSIONS AND ORDER

Based on the foregoing, Defendant Divine Food and Catering, LLC’s Demurrer to the second cause of action is SUSTAINED WITH LEAVE TO AMEND.

Defendant’s motion to strike is GRANTED WITH LEAVE TO AMEND.

Plaintiff is to file and serve an amended complaint within 20 days.

The case management conference is continued to April 3, 2023 at 8:30 am.

The Court notes that Defendant has filed four motions to quash subpoenas and Plaintiff has reserved a motion to compel further responses to written discovery.  The Court infers that there are a number of discovery disputes between the parties.  The parties are ordered to contact the Court Clerk of Department 26 to schedule an informal discovery conference.  No later than three court days prior to the IDC, each party is to file a statement not to exceed two pages summarizing the parties’ discovery disputes.

            The Moving Party is to give notice and file proof of service of such.

DATED:  January 27, 2023                                                    ___________________________

Elaine Lu

                                                                                          Judge of the Superior Court