Judge: Elaine Lu, Case: 23STCV00433, Date: 2023-10-05 Tentative Ruling

Case Number: 23STCV00433    Hearing Date: March 5, 2024    Dept: 26

Superior Court of California

County of Los Angeles

Department 26

Procedural Background

            On January 9, 2023, Plaintiffs Robert Rosenbluth (“Rosenbluth”) and Jeffrey F. Brotman as Trustee of the 2013 Robert Rosenbluth Trust (“Trustee”) (jointly “Plaintiffs”) filed the instant action against Defendants Hancock Avenue Maintenance Association, Inc. (“Association”), Calamus Group, Inc. dba The Standard Management Services (“Calamus”), Kregg Klein (“Klein”), Jesse Clark, David M. Tarazona, Danna Kinsky, Yael Kinsky, Ivan Kinsky, and Bruce Vanderhoff (collectively “Defendants”). 

            On September 20, 2023, Plaintiffs filed the operative First Amended Complaint (“FAC”) against Defendants.  The FAC asserts eight causes of action for (1) Breach of Covenants as Equitable Servitudes, (2) Breach of the Governing Documents, (3) Breach of Fiduciary Duty, (4) Negligence, (5) Nuisance, (6) Negligence, (7) Injunctive Relief, and (8) Declaratory Relief.

            On October 20, 2023, Defendants Association, Calamus, and Klein (collectively “Moving Defendants”) filed the instant demurrer and motion to strike portions of the FAC.  On February 21, 2024, Plaintiffs filed their oppositions.  On February 26, 2024, Moving Defendants filed their replies.

Allegations of the Operative Complaint

            The FAC alleges that:

            Plaintiff Rosenbluth resides at 964 Hancock Avenue California 90069 (the “Hancock”) in Unit 1 (“Rosenbluth Unit”).  (FAC ¶ 1.)  Plaintiff Trustee is owner of the Rosenbluth Unit.  (FAC ¶ 3.) 

            Defendant Association is the homeowner’s association for the Hancock.  (FAC ¶ 4.)  Defendant Klein was the president of Association at all relevant times.  (FAC ¶ 7.)  Defendant Clamas is the management company for the Association.  (FAC ¶ 6.)

            Pursuant to the CC&R’s and Davis-Stirling Common Interest Development Act (Civil Code §§ 4000, et seq.), the Association is responsible for the management, maintenance, repair, appearance and/or integrity of the Project’s Common Areas, including all pipes and plumbing in the building walls, as well as exterior surfaces of the Hancock’s units.  (FAC ¶¶ 21, 24, 26, Exh. A.)  Plaintiffs are both members of the Association.  (FAC ¶ 23.)

            The Rosenbluth Unit (Unit 1) is on the first floor.  Unit 101 (“Clark Unit”)– owned by Defendants Jesse Clark and David M. Tarazona – is right above Unit 1, and Unit 201 (“Kinsky Unit”) – owned by Defendants Danna Kinsky, Yael Kinsky, and Ivan Kinsky – is right above the Clark Unit.  (FAC ¶¶ 8-10, 33.)  After Plaintiffs purchased the Rosenbluth Unit and remodeled the inside, the Rosenbluth Unit began experiencing leaks from the ceiling causing damage to the Rosenbluth Unit and Rosenbluth’s personal property.  (FAC ¶ 34.) 

            Defendant Klein – on behalf of the Association – told Plaintiff Rosenbluth to use the Association’s go-to plumber – Angel Plumbers – to investigate the source of the leak and fix it.  (FAC ¶ 35.)  Plaintiff did so and contacted Angel Plumbers to perform the work at the Association’s expense.  (FAC ¶ 35.)  “At that time, Plaintiffs were unaware of the historic plumbing issues in the building, and the fact that Angel Plumbers was the company who had been unsuccessfully ‘repairing’ the issues. Klein was so aware. Indeed, on information and belief, Klein was directing Angel Plumbers to perform the least expensive fix for the plumbing issues, so as to save money, regardless of Angel Plumbers’ recommendation that more extensive solutions should be used, and despite the fact that the cheap and quick fixes were not working.”  (FAC ¶ 35.)

            At the Association, Klein, and Calamus’ direction, Angel Plumbers came out to supposedly fix the issue following the leak into the Rosenbluth Unit.  (FAC ¶ 36.)  However, Angel Plumbers did not fix the pipes properly.  (FAC ¶ 37.)

            “On July 16, 2019, there was a leak in the Rosenbluth Unit wherein water started pouring into the unit from the ceiling. Water raged into Plaintiffs’ unit for 2-1/2 hours before Angel Plumbers arrived. Klein was there for almost the entire experience watching as Plaintiffs’ unit was being damaged along with his personal property, as Rosenbluth emptied approximately 10 gallons of water every 2-3 minutes into his bathtub.”  (FAC ¶ 38.) 

            Klein insisted that the incident not be reported to the insurance company for the Hancock and let Angel Plumbers continue to do the repairs, but Rosenbluth refused.  (FAC ¶ 39.)  Defendant Klein “first refused to initiate an insurance claim. Then, once the claim was finally made (weeks later), [Klein] interfered extensively with that claim. Klein intercepted contractors and adjusters to provide his opinion as to what was and was not damaged in the flood. [Klein] threatened adjusters, and told them not to speak with Rosenbluth’s counsel. [Klein] and [the Association] withheld money that was sent by the insurance company for Rosenbluth to cover remediation work from the leak.”  (FAC ¶ 40.) 

            Klein argued with the Association’s insurance company and forced it to use Angle Plumbers as the contractors for the plumbing issues and reduce what specific remediation and repairs could be made.  (FAC ¶ 42.)  “Even after the insurance company sent a (reduced) check to [Association] for the repairs to the Rosenbluth Unit, Klein refused to send Rosenbluth the check, which meant that the work could not be performed, and the water damage got worse day by day. Instead, Klein held it hostage, and threatened that he would not give it to Rosenbluth unless he signed a release of HAMA and Standard Management. As Rosenbluth was out of pocket a significant amount of money due to Klein’s, HAMA’s and Standard’s actions, Rosenbluth refused to sign his document.”  (FAC ¶ 44.)  “Klein then refused to send Rosenbluth the check that [the Association]’s insurance company sent the HOA for the repairs to his unit, that he paid for. It was not until Rosenbluth retained an attorney, and incurred fees, that he was finally sent a portion of the reimbursement check from the insurance company. Notably, Rosenbluth did not get the entirety of what the insurance company approved. Instead, [the Association] charged Rosenbluth its deductible, even though it was determined that Rosenbluth had nothing to do with the cause of the leak.”  (FAC ¶ 45.)  The Association claimed recently that the leak originated from the Clark Unit.  (FAC ¶ 47.) 

            “On July 21, 2020, there was yet another leak into Rosenbluth’s unit.”  (FAC ¶ 49.)  The Association and Calamus were very slow in doing anything about the leak and had Angel Plumbers fix the leak again who again failed to properly fix it.  (FAC ¶ 49.)  The Association claimed that the 2020 leak originated from the Krinsky Unit.  (FAC ¶ 50.)

            “On August 5, 2020, [Calamus] sent an email to several units entitled ‘Hancock 964 – ‘02 stack master shower and tub drain line leak.’ The email stated that Angel Plumbers determined that the leak into the Rosenbluth Unit was ‘coming from a break in the master bathroom shower drain behind the wall in unit 102.’ It identified the leak as originating from the wall of the elevator shaft, and asked everyone on the email to cease using their master showers and tubs.”  (FAC ¶ 52.)  “Eleven days later, Rosenbluth’s Unit was again flooded with water. Again, there was significant damage caused by the flood. According to the emails that followed, the leak was caused by the exact issue that was identified on August 5 (the ‘02 stack shower drain pipe), that had not yet been repaired. Angel Plumbers – [the Association], Calamus, and/or Klein’s plumber of choice – was once again tasked with making the repairs. And, once again, instead of replacing the pipe, they again patched the holes on the corroded and old pipe.”  (FAC ¶ 55.)

            “Since the late 2020 leak, there have been multiple additional leaks into the unit, the latest one being in June 2022, wherein the leak was inside the wall of the Rosenbluth Unit. The contractor, who was selected by [the Association], Calamus, and/or Klein, suggested that the pipe that was leaking be replaced. He also noted that there was another one nearby (also in Rosenbluth’s wall) that is on the verge of leaking, and also needed to be replaced.”  (FAC ¶ 57.)  Rosenbluth was never informed of this.  (FAC ¶ 58.)

            “Rosenbluth was forced out of his house for over a year, during the pandemic, so that remediation could take place.”  (FAC ¶ 60.)  “Plaintiffs have not been reimbursed for all of the repairs they were forced to make from the flood that resulted in his displacement. Rosenbluth requested reimbursement many times, but still has not been fully repaid.”  (FAC ¶ 61.) 

            “Farmers Insurance confirmed that they had sent a check to HAMA months earlier to cover ‘repairs to the unit;’ however, [Association] held that check hostage for many months for no rational reason. When he finally received some money for the repairs, he learned that [the Association], Calamus, and/or Klein unilaterally withheld a portion of the check, and moreover, the check did not cover all of the expenses anyway.”  (FAC ¶ 62.)  “All of those insurance proceeds belong to Plaintiffs – not [the Association], Calamus, and/or Klein. Plaintiffs are entitled to the full reimbursement for the repairs.”  (FAC ¶ 63.)

            Due to the water intrusions, Plaintiffs have also been unable to sell the units causing a significant diminution in value.  (FAC ¶¶ 64-69.)  Further, since June 2021, Rosenbluth has been without water in the bathroom sink.  (FAC ¶¶ 71-72.)

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.  Therefor’e, 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.)

Moving Defendants have fulfilled the meet and confer requirement.  (Deenihan Decl. ¶¶ 3-4.)[1]

Discussion - Demurrer

            Moving Defendants contend that each claim brought against them – i.e., the first cause of action for breach of covenants as equitable servitudes against the Association, the second cause of action for breach of the governing documents against the Association, the breach of fiduciary claim brought against the Association and Klein, the fourth cause of action for nuisance against Moving Defendants, the fifth cause of action for negligence against Moving Defendants, the seventh cause of action for injunctive relief against the Association and Calamus, and the eighth cause of action for declaratory relief against the Association and Calamus – as brought by Plaintiff Rosenbluth fails because Rosenbluth lacks standing.  Specifically, Moving Defendants contend that all of the claims are based on Moving Defendants’ obligations under the CC&Rs, and Plaintiff Rosenbluth does not have standing to assert any of the claims against Moving Defendants because Rosenbluth merely occupies the Rosenbluth Unit. 

            Code of Civil Procedure § 367 provides that “[e]very action must be prosecuted in the name of the real party in interest, except as otherwise provided by statute.”  (CCP § 367.)  “Only the real party in interest has ‘an actual and substantial interest in the subject matter of the action,’ and stands to be ‘benefited or injured’ by a judgment in the action.”  (City of Santa Monica v. Stewart (2005) 126 Cal.App.4th 43, 60.)  

            As the FAC concedes, the Rosenbluth Unit is owned by the 2013 Robert Rosenbluth Trust.  (FAC ¶ 3.)  As a trust is not a legal entity, “[l]egal title to property owned by a trust is held by the trustee[.]”  (Greenspan v. LADT, LLC (2010) 191 Cal.App.4th 486, 522.)  Thus, the title owner of the Rosenbluth Unit is Plaintiff Trustee.  Each claim against Moving Defendants claims that Moving Defendants owed a duty to both Plaintiffs to maintain the common areas of the Hancock, including pipes, in part, under the CC&Rs.  (FAC ¶¶ 84-89, 97-99, 107-108, 111, 122, 129, 150, 153-154.) 

            The relevant statute provides: “[t]he [CC&Rs] shall be enforceable equitable servitudes, unless unreasonable, and shall inure to the benefit of and bind all owners of separate interests in the development. Unless the [CC&R] states otherwise, these servitudes may be enforced by any owner of a separate interest or by the association, or by both.”  (Civ. Code, § 5975(a), [Bold and Italics added].)  Thus, in relevant part, the CC&Rs can expand who can bring an action to enforce the CC&Rs.  Here, the CC&Rs provide that occupants are considered members/owners of the association.  As defined by the CC&Rs:

“Owner”, “Unit Owner”, or “Member” shall mean any person, trustee, firm, corporation, or other association in which title to all or any one or more Condominiums within the [Development] is located, and shall include (except when the context otherwise requires) the family (and each member thereof), guests, tenants under leases permitted under this Declaration, servants, agents, employees and invitees of such Owner. … As used herein, the word “family” shall mean persons related by blood, marriage or adoption.

(FAC, Exh. A at § 1.20.)

            The applicable CC&Rs clearly provide that guests and tenants are considered owners, unit owners, and members under the CC&R.  Further, “[e]ach owner … shall automatically, upon becoming an Owner of a Condominium within the Project, become a Member of the Association and receive and be subject to of the rights. privileges, duties and obligations incident to said membership in the Association and ownership of a Condominium within the Project as more particularly described in this Declaration.”  (FAC, Exh. A at § 2.07, [Bold and Italics added].)  Thus, the broad language of the CC&Rs explicitly intends for third-party beneficiaries beyond merely the title owners to the properties.  (See Goonewardene v. ADP, LLC (2019) 6 Cal.5th 817, 821, [discussing third party beneficiaries and noting that “a third party — that is, an individual or entity that is not a party to a contract — may bring a breach of contract action against a party to a contract only if the third party establishes not only (1) that it is likely to benefit from the contract, but also (2) that a motivating purpose of the contracting parties is to provide a benefit to the third party, and further (3) that permitting the third party to bring its own breach of contract action against a contracting party is consistent with the objectives of the contract and the reasonable expectations of the contracting parties.”].)   

            In reply, Moving Defendants contend that the phrase “except when the context otherwise requires” somehow prohibits Rosenbluth from bringing an action based on Moving Defendants’ failure to maintain the common areas under CC&Rs.  However, Moving Defendants fail to show how the clause “except when the context otherwise requires” deprives Plaintiff Rosenbluth from being considered an owner and member with regard to Moving Defendants’ obligation to maintain the common areas.  No case law is cited nor argument provided as to why Plaintiff Rosenbluth should not be considered an owner despite the extremely broad language of the applicable CC&Rs.

            To the contrary, as set forth in Article 10 of the CC&Rs, the Association and its agents are responsible for maintaining the common areas while “owners” are responsible for the individual areas.  (FAC Exh. A at §§ 10.01-10.02.)  Nothing in this article indicates that the term “owner” as used in the article is solely limited to title owner and is not intended to include long term guests/tenants. 

            Accordingly,  Rosenbluth as the long-term lawful occupant of the property would be a member of the Association.  (FAC ¶¶ 1, 3.)  Therefore, Moving Defendants’ demurrer based on standing is OVERRULED.

Discussion – Motion to Strike

Moving Defendant moves to strike the prayer for punitive damages.

Punitive Damages

California Civil Code section 3294, subdivision (a), provides: “In an action for the breach of an obligation not arising from contract, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant.”  “‘Malice’ means conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.” (Id. at (c)(1).) “‘Oppression’ means despicable conduct that subjects a person to cruel and unjust hardship in conscious disregard of that person’s rights.” (Id. at (c)(2).) “‘Fraud’ means an intentional misrepresentation, deceit, or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury.” (Id. at (c)(3).) Punitive damages thus require more than the mere commission of a tort. (See Taylor v. Superior Court (1979) 24 Cal.3d 890, 894-95.)

Moreover, a demand for punitive damages for the commission of any tort requires more than the mere conclusory allegations of “oppression, fraud, and malice.”  (Civ. Code § 3294; see Perkins v. Superior Court (1981) 117 Cal. App.3d 1, 6-7.)

            Here, the FAC alleges punitive damages only against Defendant Association and Defendant Klein.  (FAC ¶ 120.)  As to Defendant Association and Defendant Klein, the allegations are sufficient to state a basis for punitive damages.  The FAC details that the president of the Association – Defendant Klein – intentionally refused to initiate an insurance claim, personally interfered with the insurance claim and personally caused the insurance company to reduce any payments to Plaintiffs for the damages from the water leaks, intentionally delaying payment of the insurance proceeds to Plaintiffs, and wrongfully withholding a significant portion of the insurance proceeds.  (FAC ¶¶ 40, 42, 44-45.)  These allegations are more than mere conclusory allegations of “oppression, fraud, and malice[.]” (Perkins, supra, 117 Cal. App.3d at pp.6-7.)  If true, these allegations could support a claim of oppression or malice necessary to support a prayer for punitive damages against Defendants Association and Klein.

            Accordingly, Moving Defendants’ motion to strike is DENIED.

CONCLUSIONS AND ORDER

Based on the foregoing, Defendants Hancock Avenue Maintenance Association, Inc., Calamus Group, Inc. dba The Standard Management Services, and Kregg Klein’s demurrer is OVERRULED.

Moving Defendants’ motion to strike is DENIED.

Moving Defendants are to file their answer within thirty (30) days of notice of this order.

The case management conference is continued to May 2, 2024 at 8:30 am.

            Moving Parties are to give notice and file proof of service of such.

DATED:  March ___, 2024                                                    ___________________________

Elaine Lu

                                                                                          Judge of the Superior Court