Judge: Elaine W. Mandel, Case: 20SMCV00370, Date: 2023-09-29 Tentative Ruling

Case Number: 20SMCV00370    Hearing Date: March 14, 2024    Dept: P

Tentative Ruling

Bru et al. v. Douglas Emmett, Inc. et al., Lead Case No. 20SMCV00370 (and related cases 20STCV14331, 20STCV15442 and 22STCV03650)

Hearing Date March 14, 2023

Defendants Douglas Emmett Management and Barrington Pacific, LLC’s Motions for Summary Adjudication

Douglas Emmett, Inc.’s Motion for Summary Adjudication.

These cases arise out of a fire at the Barrington Plaza apartments in which numerous plaintiffs were injured and the Bru plaintiffs’ decedent perished.

Defendants Douglas Emmett Management (DEM) and Barrington Pacific (Barrington) move for summary adjudication of plaintiffs’ punitive damages claims in the lead case and related cases 20STCV14331, 20STCV15442 and 22STCV03650, arguing they did not engage in conduct egregious enough to support such damages.

Defendant Douglas Emmett, Inc. (DEI) moves separately for summary adjudication of punitive damages, arguing it did not own Barrington Plaza, did not exercise control over its day-to-day operations, and none of its officers, directors or managing agents acted with malice, oppression or fraud sufficient to support a finding of punitive damages.

DEM/Barrington Pacific Motion

To recover punitive damages, plaintiff must prove by “clear and convincing evidence” that defendant engaged in malice, oppression or fraud. Cal. Civ. Code §3294. Summary judgment is proper “when no reasonable jury could find the plaintiff’s evidence to be clear and convincing proof of malice, fraud, or oppression.” Butte Fire Cases (2018) 24 Cal.App.5th 1150, 1158.

DEM managed Barrington Plaza apartments; Barrington owned it. DEM and Barrington argue they undertook extensive efforts to ensure fire safety at Barrington Plaza, including conducting annual fire drills in 2013-2020 through Allied Universal, training property management, staff, security and residents in the use and operation of fire safety systems, maintaining a list of disabled residents who might need extra assistance during a fire, performing annual “regulation 4” testing of fire detection and safety systems, installing self-closing door hinges and low-heat stove burners and implementing regular fire drills. DEM/Barrington Separate Statement of Undisputed Material Facts (DBUMF) 2-10, 14-16, 40, 41, 44-51.

DEM and Barrington support these facts via the declaration of Robert Lutes, DEM’s Director of Engineering, the deposition of Martin Fellbaum, Regional Manager and PMQ for Allied Universal, a 2014 invoice for purchase of self-closing hinges and the deposition of plaintiff Sergei Maidaniuk, who describes a 2019 fire drill, as well as the loud fire alarm and tenant intercom system that alerted him to the 2020 fire.

DEM and Barrington acknowledge that Barrington Plaza lacked a fire sprinkler system but argue this was because Los Angeles Rent Stabilization Ordinance (LARSO) and the Los Angeles Housing Department prevented them from emptying the building entirely while such construction was performed, and the LAFD prohibited them from emptying the building piecemeal.

Douglas Emmett CEO Jordan Kaplan testified that even though no sprinklers were required, defendants made substantial efforts to obtain bureaucratic approval for their installation, to no avail. DBUMF 35-37. Defendants present evidence that DEM and Barrington implemented various measures to protect tenants from fire. They argue this precludes a fact-finder from concluding they acted with the malice required for punitive damages. The court agrees defendants present evidence of efforts after the 2013 fire to prevent recurrence and to ensure fire safety, sufficient to meet their initial burden on summary judgment. The burden of proof shifts to plaintiffs to show a triable issue of fact.

Plaintiffs rely primarily on declarations. Retired Los Angeles Fire Marshall Craig Fry opined defendants’ fire safety measures prior to the 2020 fire were flawed. After reviewing depositions of various DEM employees/officers and documents, Fry opined defendants violated various provisions of the Fire Code portions of the Los Angeles Municipal Code applicable to high-rise buildings, as well as non-statutory community standards. Fry decl. ¶22, 23.

Among the violations Fry identifies are Fire Safety Director Sherri Router’s failure to read defendants’ entire emergency manual, the absence of a fire safety director training certificate for Router or any other person at Barrington Plaza prior to 2020, absence of designated Floor Wardens (which resulted in a Fire/Life Safety Violation from the LAFD on February 13, 2020), failure to take affirmative steps to ensure residents actually reviewed Occupant Instructions for conduct during a fire, failure to maintain documentation of fire drills (which resulted in three citations from the City), failure to implement “zoned evacuation” rather than evacuating an entire building at once and failure to implement the “rule of five,” by which only five specific floors are evacuated during a fire, while residents of other floors are instructed to “shelter in place.” Fry decl. ¶¶28-88.

The court notes an expert cannot testify to legal conclusions in the guise of expert opinion. Downer v. Bramet (1984) 152 Cal.App.3d 837, 841. Fry’s testimony regarding whether the defendants complied with the Fire Code is inadmissible, as it seeks to apply the law to the facts, which is the province of the finder of fact. However, Fry may testify regarding Code requirements and his opinion as to whether defendants met the relevant standard of care.

Even excluding ultimate opinions regarding compliance with the Fire Code, Fry provided adequate opinion, including absence of adequate evacuation procedures, self-closing doors, compliance with the “Rule of Five” and inadequate emergency announcements, which rely on his expertise. Taken together, the evidence could together constitute despicable conduct sufficient to support a finding of punitive damages. Fry decl. ¶¶82-101, 103.

Defendants argue plaintiffs only allege conduct that fell below the standard of care, which is not the standard for imposition of punitive damages. Defendants argue all alleged violations were technical and did not cause injury. Defendants are correct that absent causation, there can be no ultimate liability and therefore no award of punitive damages. However, Fry opines “[d]efendants’ violation of the standard of care caused several floors of occupants to unnecessarily go into the smoke-filled stairwells. Defendants’ violations of the standard of care caused the stairwells to contain people unnecessarily, which hampered LAFD fire attack and rescue operations.” Fry decl. ¶100. This adequately alleges a causal link between defendants’ violations and plaintiffs’ injuries.

While each violation, on its own, might not be sufficient to sustain a claim for punitive damages, a reasonable juror, considering the violations in total, bolstered by Fry’s opinions, could conclude defendants’ conduct was despicable sufficient to form the basis for an award of punitive damages. The evidence is sufficient to create a triable issue of fact regarding the impact of these deficiencies on the delayed Fire Department response or other bases, upon which a punitive damages award might be based. DENIED.

DEI

Defendant DEI moves for summary adjudication of plaintiffs’ request for punitive damages. DEI describes itself as a “passive investor and indirect parent of Barrington.” Motion at pg. 3. DEI’s Separate Statement of Material Facts 9 (DSS 9). It argues it is a separate entity from Barrington and DEM, which exercised no control over fire safety policy at Barrington Plaza. Therefore, it argues, it cannot be vicariously liable for Barrington and DEM’s breaches and cannot be liable for punitive damages based on their wrongdoing.

A parent company can be liable for acts of its subsidiaries if the “nature and extent of the control exercised over the subsidiary by the parent is so pervasive and continual that the subsidiary may be considered nothing more than an agent or instrumentality of the parent.” Dorel Indus., Inc. v. Superior Court (2005) 134 Cal.App.4th 1267, 1276. Because punitive damages are unavailable absent actual damages, there must be a basis for vicarious liability to award punitive damages to a parent company for its subsidiary’s wrongdoing. E.g., Kizer v. County of San Mateo (1991) 53 Cal.3d 139.

DEI cites Laird v. Capital Cities/ABC Inc. (1998) 68 Cal.App.4th 727 and Waste Mgmt., Inc. v. Superior Court (2004) 119 Cal.App.4th 105 for the proposition that when a subsidiary makes its own decisions and is not controlled by its parent, the parent cannot be liable for the subsidiary’s actions. According to DEI, since it did not exercise control over DEM and Barrington, is not involved in day-to-day operations and maintains a separate structure (e.g., separate bank accounts, accounting records, boards of directors, minutes and liability insurance), it cannot be liable for its subsidiaries’ actions. DEI separate statement of undisputed material facts (9–13).

Plaintiffs present evidence, including depositions of various DEI employees/officers that DEM, DEI and Barrington are intertwined. They share headquarters; the leadership team had offices at Douglas Emmett headquarters, they share many of the same officers, and it was a standing policy that if there was a code violation at Barrington Plaza, it was required to be reported to DEI officers. Plaintiffs’ separate statement 165-177.

John Spelke, plaintiffs’ expert in real estate and corporate structure, opines DEM, DEI, and Barrington are “all one company, ‘Douglas Emmett’ headed by Jordan Kaplan as the CEO of DEI.” Spelke decl., pg. 4. Among the factors Spelke identifies are: Kaplan made sprinkler retrofit decisions on behalf of Barrington, acted as an officer for DEI and DEM, participated in quarterly DEI investment calls and failed to distinguish which entities he as representing when working on the retrofit project. Spelke decl. ¶¶4-22.

DEI correctly argues that Kaplan serving as CEO of both DEM and DEI, without more, cannot expose the parent company to liability for its subsidiaries’ acts. See, e.g., United States v. Bestfoods (1998) 524 U.S. 51, 69. The court agrees Kaplan’s dual role alone is insufficient to support a finding of alter ego liability. DEI presented substantial evidence that DEI and DEM maintained independent corporate structures, though they shared an office and some overlapping directors/executives.

However, a complete unity of identity and interest is not necessary to hold a parent liable for the acts of a subsidiary. There is substantial evidence that DEM acted as DEI’s agent with respect to Barrington Plaza. Unlike in Laird, plaintiffs present substantial evidence that DEI was involved in the day-to-day management of safety issues. Spelke noted “if there’s a code violation at Barrington Plaza it would be reported to the officers of DEI,” and DEI was highly involved in the sprinkler retrofit project, through Kaplan acting in his capacity as CEO of DEI (not DEM). Spelke decl. ¶17.

A reasonable finder of fact could conclude, based on the totality of these facts, that DEI controlled DEM’s day-to-day operations with respect to fire safety and was aware of and/or ratified the alleged violations detailed above. Plaintiffs present evidence raising a triable issue of material fact on this issue. Summary judgment DENIED.

Objections in DEM/Barrington MSJ

Plaintiffs’ Objections: Objection 1 – 10 OVERRULED, Objection 11 SUSTAINED (irrelevant), Objection 12-22 OVERRULED.

Defendants’ Objections: Objection 1 OVERRULED, objections 2-8, SUSTAINED (legal conclusions), objections 9-19 OVERRULED, Objections 20-21 SUSTAINED (hearsay), Objections 22-26 OVERRULED, Objection 27 SUSTAINED (Immaterial), Objection 28 SUSTAINED (hearsay).

Defendants’ Objection to Joinder

OVERRULED. Frazee v. Seely (2002) 95 Cal.App.4th 627 held that a party moving to join a motion in connection with an MSJ or MSA “shall support their motion with a separate statement.” Moving parties here did not do so. Failure to provide a separate statement on its own is not a sufficient basis to deny an MSA, but in Frazee the moving parties’ failure to include their own SS necessitated denial because the other parties’ separate statement did not support a ruling in their favor. Id at 637. Here, the separate statement provided by the other parties is sufficient to support a ruling in favor of the joining parties.

Objections in DEI MSJ 

Objections 1-3 OVERRULED, Objection 4 SUSTAINED (lack of foundation), Objection 5-6 SUSTAINED (improper opinion), Objection 8 OVERRULED, Objection 9 SUSTAINED (improper opinion), Objection 10 OVERRULED, Objections 11-18 OVERRULED.

The court is in receipt of no objections from defendant DEI, only a response to objections filed by plaintiffs.