Judge: Gail Killefer, Case: 24STCV13568, Date: 2025-05-27 Tentative Ruling

Case Number: 24STCV13568    Hearing Date: May 27, 2025    Dept: 37

HEARING DATE:                 Monday, May 27, 2025

CASE NUMBER:                   24STCV13568

CASE NAME:                        AAD Grand LLC v. Amanda Emily Drago

MOVING PARTY:                 Plaintiff/Cross-Defendant AAD Grand LLC

OPPOSING PARTY:             None

TRIAL DATE:                        Not set

PROOF OF SERVICE:           OK

PROCEEDING:                      Demurrer to Complaint with Motion to Strike

OPPOSITION:                        None

REPLY:                                  None

TENTATIVE:                         Cross-Defendant’s demurrer to the fourth cause of action is overruled, but granted as to the fifth and sixth cause of action with leave to amend. The motion to strike is also granted with 10 days leave to amend. The court sets the OSC RE: Amended Complaint for June 13, 2025, at 8:30 a.m. The Case Management Conference is continued to August 18, 2025, at 8:30 a.m.  Defendant to give notice.

Background

On May 30, 2024, AAD Grand LLC (“Plaintiff”) filed a Complaint against Amanda Emily Drago (“Defendant”) for breach of written contract related to lease for a residential property (the “Property”) located at 2960 Lakeridge Dr., Los Angeles, CA.

On February 13, 2025, Defendant filed a Cross-Complaint against Plaintiff with eight causes of action: (1) Breach of contract, (2) Conversion, (3) Violation of Civ. Code. § 1950.5, (4) Breach of the covenant of good faith and fair dealing, (5) Fraud – intentional misrepresentation, (6) Negligence, (7) Unfair Business Practices (Bus. & Prof. Code, § 17200), and (8) Declaratory Relief.

Plaintiff/Cross-Defendant now demurs and moves to strike the Cross-Complaint. No opposition or reply has been filed. The matter is now before the court.

LEGAL STANDARDS

A.        Demurrer 

A demurrer is an objection to a pleading, the grounds for which are apparent from either the face of the complaint or a matter of which the court may take judicial notice. (CCP § 430.30(a); see also Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)¿“To survive a demurrer, the complaint need only allege facts sufficient to state a cause of action; each evidentiary fact that might eventually form part of the plaintiff’s proof need not be alleged.”¿(C.A. v. William S. Hart Union High School Dist. (2012) 53 Cal.4th 861, 872.)¿For the purpose of testing the sufficiency of the cause of action, the demurrer admits the truth of all material facts properly pleaded.¿ (Aubry v. Tri-City Hospital Dist. (1992) 2 Cal.4th 962, 966-967.)¿A demurrer “does not admit contentions, deductions or conclusions of fact or law.”¿(Daar v. Yellow Cab Co. (1967) 67 Cal.2d 695, 713.)¿¿ 

B.        Motion to Strike 

¿Any party, within the time allowed to respond to a pleading may serve and file a notice of motion to strike the whole or any part thereof. (CCP § 435(b)(1); CRC, rule 3.1322(b).) The court may, upon a motion or at any time in its discretion and upon terms it deems proper: (1) strike out any irrelevant, false, or improper matter inserted in any pleading; or (2) strike out all or any part of any pleading not drawn or filed in conformity with the laws of California, a court rule, or an order of the court. (CCP § 436(a)-(b); Stafford v. Shultz (1954) 42 Cal.2d 767, 782 [“Matter in a pleading which is not essential to the claim is surplusage; probative facts are surplusage and may be stricken out or disregarded”].)¿¿¿¿ 

C.        Leave to Amend 

“Where the defect raised by a motion to strike or by demurrer is reasonably capable of cure, leave to amend is routinely and liberally granted to give the plaintiff a chance to cure the defect in question.” (CLD Construction, Inc. v. City of San Ramon (2004) 120 Cal.App.4th 1141, 1146.) The burden is on the complainant to show the Court that a pleading can be amended successfully. (Goodman v. Kennedy (1976) 18 Cal.3d 335, 348.)¿¿¿ 

Demurrer[1]

I.         Discussion

A.        Factual Allegations in Cross-Complaint

On or about January 17, 2023, Cross-Complainant and Cross-Defendant entered into a written least (the “Lease Agreement”) for a residential property (the “Property”) located at 2960 Lakeridge Dr., Los Angeles, CA. (Cross-Compl., ¶ 6.) The Lease Agreement required Cross-Complainant to pay a $50,000 security deposit. (Id. ¶ 7.) In May 2023, Cross-Complainant became the victim of domestic violence at the hands of her then-husband and obtained a restraining order against him. (Id. ¶ 9.)

Cross-Complainant asserts that she notified Cross-Defendant “multiple times of the domestic violence and the resulting safety concerns that necessitated Cross-Complainant’s departure from the Property.” (Cross-Compl., ¶ 9.) Civ. Code § 1946.7 allows tenants who are victims of domestic violence to terminate a lease early without penalty when they provide the landlord with written notice and supporting documentation, such as a restraining order. (Id. ¶ 10.) “On or about May 18, 2023, Cross-Complainant provided Cross-Defendant with formal written notice of her intent to terminate the Lease Agreement pursuant to Civil Code § 1946.7.” (Ibid.)

Cross-Complainant complied with the requirement of Civ. Code § 1946.7 prior to vacating the Property on or about June 13, 2023. (Cross-Compl., ¶ 11.) “Prior to vacating, Cross-Complainant thoroughly cleaned the Property, documented its condition with photographs, and conducted a walkthrough inspection to confirm the absence of damages.” (Ibid.)

Although the Property was surrendered in excellent condition, Cross-Defendant failed to return the security deposit within 21 days of Cross-Complainant vacating the Property and without providing a written itemization of the deduction in violation of Civ. Code § 1950.5. (Id. ¶ 11.)

Cross-Defendants kept the $50,000 security deposit for alleged damages without providing receipts, photographs or other documentation. (Id. ¶ 13.) Cross-Defendant’s refusal to return the security deposit has caused Cross-Complainant significant financial harm and severe stress. (Id. ¶ 15.)

Cross-Defendants now have filed a demurrer to the fourth, fifth, and sixth causes of action for breach of the breach of covenant of good faith and fair dealing, fraud – intentional misrepresentation, and negligence. Cross-Complainant failed to oppose the demurrer.

B.        4th Cause of Action – Breach of the Implied Covenant of Good Faith and Fair Dealing

Cross-Defendant assert that the claim for breach of contract and breach of the implied convent of good faith and fair dealing are duplicative because the claims “simply seek the same damages or other relief already claimed in a companion contract cause of action” such the claim for breach of the implied covenant “be disregarded as superfluous as no additional claim is actually stated.” (Careau & Co. v. Security Pacific Business Credit, Inc. (1990) 222 Cal.App.3d 1371, 1395.)

In her claim for breach of contract, Cross-Complainant requests damages for the loss of the “$50,000 security deposit, interest on the withheld funds, financial hardship caused by the delay in recovering these funds, and additional expenses incurred in attempting to resolve the issue.” (Cross-Compl., ¶ 42.) The damages requested for breach of the implied covenant are “the loss of the $50,000 deposit, interest on the unlawfully withheld funds, financial hardship, and emotional distress caused by Cross-Defendant’s bad-faith conduct.” (Id. ¶ 62.) The bad-faith conduct alleged in the Cross-Defendant’s wrongfully withheld the security deposit “without providing any lawful justification or required documentation.” (Id. ¶ 60.)

Cross-Defendant ignores the fact that the fourth cause of action requests damages for emotional distress. “[A] tortious breach of contract … may be found when . . . (3) one party intentionally breaches the contract intending or knowing that such a breach will cause severe, unmitigable harm in the form of mental anguish, personal hardship, or substantial consequential damages.” (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal.4th 979, 990.)

The Cross-Complaint alleges that Cross-Defendants were “notified multiple times” that Cross-Complainant was victim of domestic violence, that she intended to vacate the property due to domestic violence, pursuant to Civ. Code § 1946.7, and that she was entitled to vacate the property under section 1946.7 without penalty. (Cross-Compl., ¶¶ 9-11.)

Nevertheless, Cross-Defendants intentionally “failed to recognize the protections guaranteed to domestic violence survivors under California law” by intentionally withholding the security deposit despite being required  to return the security deposit within 21 days or provide written itemization for the deductions made as required by Civ. Code section 1950.5. (Id ¶¶ 12, 20, 45, 60.) Said conduct was done with willful disregard for “Cross-Complainant’s safety, emotional well-being, and financial stability.” (Id. ¶ 26.) “Cross-Defendant’s silence, refusal to engage in meaningful dialogue, and unsupported claims of damages were tactics designed to intimidate and discourage Cross-Complainant from pursuing her rights.” (Ibid.)

Based on these allegations, the court finds that Cross-Complainant has pled a viable claim for breach of the implied covenant of good faith and fair dealing and overruled the demurrer to the fourth cause of action.

C.        5th Cause of Action – Fraud- Intentional Misrepresentation

The elements of a misrepresentation claim are: (1) misrepresentation (false representation, concealment, or nondisclosure); (2) knowledge of falsity (scienter); (3) intent to defraud or induce reliance; (4) justifiable reliance; and (5) damages. (See Civ. Code § 1709; Chapman v. Skype Inc. (2013) 220 Cal.App.4th 217, 230–231.) Fraud actions are subject to strict requirements of particularity in pleading. (Lazar v. Superior Court (1996) 12 Cal.4th 631, 645.) A plaintiff must allege what was said, by whom, in what manner (i.e. oral or in writing), when, and, in the case of a corporate defendant, under what authority to bind the corporation. (See Goldrich v. Natural Y Surgical Specialties, Inc. (1994) 25 Cal.App.4th 772, 782.)

Cross-Defendant’s demurrer to the fifth cause of action is based on the assertion that the claim is not pled with the requisite specificity. The Cross-Complaint alleges “Cross-Defendant knowingly made false representations to Cross-Complainant regarding her $50,000 security deposit. These misrepresentations included, but were not limited to, statements that the deposit was being lawfully withheld due to alleged damages to the property or other purported breaches of the lease agreement.” (Cross-Compl., ¶ 65.)

However, the Cross-Complaint fails to state in what manner or by what means the misrepresentation was made, who made the misrepresentation, and what was the person’s authority to make representations on behalf of Cross-Defendant. Moreover, Cross-Complainant fails to allege how she relied on the misrepresentations to her detriment and that the person making the misrepresentation knew the representation was false at the time they were made.

The demurrer to the fifth cause of action is sustained with leave to amend.

D.        6th Cause of Action – Negligence

“The elements of a cause of action for negligence are well established. They are (a) a legal duty to use due care; (b) a breach of such legal duty; [and] (c) the breach as the proximate or legal cause of the resulting injury.” (Ladd v. County of San Mateo (1996) 12 Cal.4th 913, 917 [internal quotations omitted].)

The Cross-Complaint alleges that Cross-Defendant breached their statutory duty under Civ. Code § 1950.5 by failing to return the security deposit or provide itemized deductions to justify the retention of the security deposit. (Cross-Compl., ¶ 76.) Cross-Defendants demur to the sixth cause of action on the basis that the claim is barred by the economic loss rule.

As explained by the California Supreme Court, “the economic loss rule prevents the law of contract and the law of tort from dissolving into the other.” (Robinson Helicopter Co., Inc. v. Dana Corp. (2004) 34 Cal. 4th 979, 989.) In another recurring set of circumstances, the rule functions to bar claims in negligence for pure economic losses in deference to a contract between litigating parties. “[T]he  rule functions to bar claims in negligence for pure economic losses in deference to a contract between litigating parties.” (Sheen v. Wells Fargo Bank, N.A. (2022) 12 Cal.5th 905, 922 (Sheen).)

The Cross-Complaint asserts that the security deposit was required by the Lease Agreement. (Cross-Compl., ¶ 7.) The Cross-Complainant also failed to oppose the demurrer or explain why the obligation to return the security deposit arose from an obligation independent of the Lease Agreement such that she can assert a negligence claim. (Sheen, supra, 12 Cal.5th at p. 923.)

The demurrer to the sixth cause of action is sustained with leave to amend.

Motion to Strike

Cross-Defendants seek to strike the following from the Cross-Complaint:

1)     Page 9, Paragraph 34, Lines 10:14;

2)     Page 11, Paragraph 50, Lines 14:17;

3)     Page 14-15, Paragraph 73, Lines 27-2; and

4)     Page 19, Paragraph 5, Lines 10-22.

When the defendant is a¿corporation, “the oppression, fraud, or malice must be perpetrated, authorized, or knowingly ratified by an officer, director, or managing agent of the¿corporation.” (Wilson v. Southern California Edison Company (2015) 234 Cal.App.4th 123, 164; see Civ. Code, § 3294(b). For corporate punitive damages liability under section 3294(b), the plaintiff must show that a managing agent, officer, or director of the corporation authorized or ratified the wrongful conduct for which punitive damages are sought. (Civ. Code, § 3294(b); Whitev. Ultamar (1999) 21 Cal.4th 563, 572.) An individual must be in a corporate policymaking position in order to be considered a managing agent for the purposes of imposing punitive damages liability on the corporation. (Myers v. Trendwest Resorts, Inc. (2007) 148 Cal.App.4th 1403, 1437.)

The Cross-Complaint fails to allege factual assertions showing that an officer, director, or managing agent of Cross-Defendant engaged in wrongful conduct that amounted to oppression, fraud, or malice. Therefore, the motion to strike is granted with leave to amend.

Conclusion

Cross-Defendant’s demurrer to the fourth cause of action is overruled, but granted as to the fifth

and sixth cause of action with leave to amend. . The motion to strike is also granted with 10 days

leave to amend. The court sets the OSC RE: Amended Complaint for June 13, 2025, at 8:30 a.m.

The Case Management Conference is continued to August 18, 2025, at 8:30 a.m.  Defendant to

give notice.