Judge: Gail Killefer, Case: 24STCV24878, Date: 2025-04-14 Tentative Ruling

Case Number: 24STCV24878    Hearing Date: April 14, 2025    Dept: 37

HEARING DATE:                 Monday, April 14, 2025

CASE NUMBER:                   24STCV24878

CASE NAME:                        Asian Youth Center v. Kristo Holdings, LLC, et al.

MOVING PARTY:                 Defendants Hristo Holdings, LLC and Hranush Mkrtchyan

OPPOSING PARTY:             Plaintiff Asian Youth Center

TRIAL DATE:                        Not Set

PROOF OF SERVICE:           OK

PROCEEDING:                      Demurrer to FAC

OPPOSITION:                        07 March 2025

REPLY:                                  07 March 2025

TENTATIVE:                         Defendants’ demurrer to the FAC, is overruled as to the first and second cause of action and sustained with leave to amend the third and fourth causes of action. Plaintiff is granted 10 days leave to amend. The court sets the OSC RE: Amended Complaint for May 2, 2025, at 8:30 a.m.  The Case Management Conference is also continued to May 2, 2025, at 8:30 a.m.  Defendants to give notice.

Background

This action concerns a lease for a commercial real property located at 232 West Clary Avenue, San Gabriel, CA 91776 (the “Premises”). On September 25, 2024, Asian Youth Center (“Plaintiff”) filed this action against Kristo Holdings, LLC (“Kristo”) and Hranush Mkrtchyan (“Mkrtchyan”) (collectively “Defendants”).

The operative First Amended Complaint (“FAC”) alleges four causes of action for:

1)     Breach of Written Lease;

2)     Declaratory Relief;

3)     Trespass; and

4)     Ejectment.

Defendants now each demur to the FAC. Plaintiff opposes both demurrers. The matter is now before the court.

demurrer to first amended complaint[1]

I.         Legal Standard

Where pleadings are defective, a party may raise the defect by way of a demurrer. (Coyne v. Krempels (1950) 36 Cal.2d 257, 262.) A demurrer tests the sufficiency of a pleading, and the grounds for a demurrer must appear on the face of the pleading or from judicially noticeable matters.¿ (CCP, § 430.30(a); Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) In evaluating a demurrer, the court accepts the complainant’s properly pled facts as true and ignores contentions, deductions, and conclusory statements. (Daar v. Yellow Cab Co. (1976) 67 Cal.2d 695, 713; Serrano v. Priest (1971) 5 Cal.3d 584, 591.) Moreover, the court does not consider whether a plaintiff will be able to prove the allegations or the possible difficulty in making such proof. (Fisher v. San Pedro Peninsula Hospital (1989) 214 Cal.App.3d 590, 604.) 

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 complainant to show the Court that a pleading can be amended successfully. (Ibid.)

II.        Request for Judicial Notice

The court may take judicial notice of “official acts of the legislative, executive, and judicial departments of the United States and of any state of the United States,” “[r]ecords of (1) any court of this state or (2) any court of record of the United States or of any state of the United States,” and “[f]acts and propositions that are not reasonably subject to dispute and are capable of immediate and accurate determination by resort to sources of reasonably indisputable accuracy.” (Evid. Code § 452(c), (d), and (h).) “Taking judicial notice of a document is not the same as accepting the truth of its contents or accepting a particular interpretation of its meaning.” (Joslin v. H.A.S. Ins. Brokerage (1986) 184 Cal.App.3d 369, 374.)

III.      Discussion

A.        Procedural History and Factual Summary

Defendants assert that all four causes of action are collaterally estopped under the doctrine of res judicata due to two prior unlawful detainer actions in which Plaintiff tried to obtain possession of the Premises.

                        i.          The First UD Action

The first unlawful detainer action (the “First UD Action”) was filed by Plaintiff against Defendants on September 9, 2021. (Defendant’s RJN Ex. 1-2; Plaintiff’s RJN Ex. 1-3.) The Complaint in the First UD Action asserts that Defendants were served with a 3-day notice to perform covenants or quit. (Plaintiff’s RJN Ex. 1.)

After Defendants filed a motion for summary adjudication, on March 22, 2022, the court in the First UD Action found that Plaintiff (1) failed to give Defendants ten (10) days’ written notice to provide documentation or evidence of the “appropriate permits and a business license,” and (2) failed to give Defendants ten (10) days’ written notice to provide Plaintiff with documentation or evidence of an “appropriate liability insurance policy,” as required by Paragraph 13.1(d) of the Lease. (Defendant’s RJN Ex. 1-3; Plaintiff’s RJN Ex. 2-3.)

On October 28, 2022, the court entered Judgment in favor of Defendants and against Plaintiff and Plaintiff took nothing by way of the unlawful detainer complaint. (Defendant’s RJN Ex. 2.)

                        ii.         The Second UD Action

Plaintiff filed the second unlawful detainer action (the “Second UD Action”) against Defendants on August 1, 2022. (Plaintiff’s RJN Ex. 4.)

On July 24, 2023, the trial court denied Defendants’ motion for summary judgment finding there were triable issues of fact as to whether the amount demanded as unpaid rent in Plaintiff's notice to pay rent or quit, dated June 17, 2022, was an accurate and lawful amount not exceeding the amount that could then be demanded under the law then prevailing.

The issue presented to the jury was whether Defendants no longer had the right to occupy the Premises because they had failed to pay rent and whether Plaintiff properly provided notice to pay rent and vacate the Property. On February 23, 2024, the court entered Judgment in favor of Defendants and against Plaintiff. Plaintiffs subsequently appealed, and the appeal is pending. (Plaintiff’s RJN Ex. 4-7.)

iii.       The Present Action

On September 25, 2025, Plaintiff filed this present action against Defendants pertaining to the same lease and Premises as the prior two UD actions.

The FAC alleges that Plaintiff is the owner of the Premises and on or about October 16, 2019, Plaintiff and Defendants entered the Lease (the “Lease”), in which Defendants agreed to lease the Property for a term of five years, with the Lease expiring on October 31, 2024. (FAC ¶¶ 16, 17, 56; Ex. A ¶¶ 1.1, 1.3.) The Lease gave Defendants two five-year options to renew the Lease, if Defendant provided timely notice of their exercise and were not in default under the term of the Lease. (Id., ¶¶ 4, 24, 55, 59; Ex. A ¶¶ 39.4,  51.)

The FAC asserts that on April 1, 2024, Defendants purported to exercise the first of the two options under the Lease.  On April 2, 2024, Plaintiff rejected the option because Defendants were in default, the default was not cured, and Defendants were in breach of the Lease, thus depriving them of the right to exercise the option to renew the Lease. (FAC, ¶¶ 59-62; Ex. A ¶ 39.4(a)(i), (iii), and (iv).)

The FAC alleges the following defaults or breaches of the Lease:

·       Notice No. 1: Failure to cure the Notice re Insurance before seeking to exercise the Option. (FAC, ¶ 63.) Paragraphs 8.5 and 8.6 require Defendants to maintain an insurance policy and provide copies. (Id. ¶¶ 22, 23.) Moreover, under Paragraph 53 of the Lease, Defendants were required to purchase liability insurance policy in an amount no less than $2 million and add Plaintiff as a covered party. (Id. ¶ 25.)

Plaintiff served the Notice on or about March 14, 2024, and on March 21, 2024, Defendants provided Plaintiff with a Certificate of Liability Insurance naming Plaintiff as the “certificate holder”, which expired on March 19, 2024. (Id. ¶¶ 28, 29.) On December 18, 2024, Defendants provided Plaintiff with a more recent proof of insurance naming Plaintiff as an “Additional insured, commencing on July 26, 2024, and expires on July 26, 2025. (Id. ¶ 31.)  Consequently, Plaintiff learned that Defendants let the liability insurance on the Premise lapse “for the period of March 19, 2024, through July 25, 2024, in breach of ¶ 8.5 of the Lease.” (Id. ¶ 31.) Pursuant to ¶ 39.4(a)(iv), there have been three or more notices of default during the 12-month period immediately preceding the exercise of the Option. (Id. ¶ 63.)

·       Notice No. 2: Notice to Replenish the Security Deposit (dated March 13, 2024). (FAC, ¶ 64.) “Pursuant to ¶ 1.6(b) of the Lease, Defendants were required to pay a Security Deposit of $22,092.00. Pursuant to ¶ 5 of the Lease, [i]f Lessor uses or applies all or any portion of the Security Deposit, Lessee shall within 10 days after written request therefor deposit monies with Lessor sufficient to restore said Security Deposit to the full amount required by this Lease.” (Id. ¶ 19.) “The security deposit was thereafter replenished, but after the time to cure had expired.” (Id. ¶ 3(b).)

·       Notice No. 3: Notice re Execution of the Guaranty (dated March 14, 2024). (FAC, ¶ 64.) “Pursuant to ¶ 1.10 of the Lease, the obligations of the Lessee under the Lease were to be guaranteed by Khachatour Badalian.” (Id. ¶ 21.) However, the Guaranty has not been executed because guarantor’s contract information has not been provided. (Id. ¶ 3(c).)
“Badalian thereafter executed the Guaranty (but omitted his contact information despite a request to provide same), and returned it to Plaintiff.” (Id. ¶ 34, Ex. B.) Plaintiff to date is still waiting for Badalian to provide his street address, e-mail address and telephone number to complete the execution of the Guaranty. (Id. ¶¶ 34, 64.)

B.        The Present Action is Not Barred by the Doctrine of Res Judicata or Collateral Estoppel

“Prior litigation by the same parties on a different cause of action has a collateral estoppel effect only as to those issues litigated and determined in the prior action.” (Landeros v. Pankey (1995) 39 Cal.App.4th 1167, 1171 (Landeros) [italics original].) “The party asserting collateral estoppel has the burden to show from the record of the prior action that the asserted issue was previously litigated and determined.” (Ibid.)

CCP § 1908(a)(2) “codifies the res judicata doctrine, and provides that ‘a judgment or final order in an action or special proceeding” is conclusive as to “the matter directly adjudged.’ ” (Needelman v. DeWolf Realty Co., Inc. (2015) 239 Cal.App.4th 750, 757 (Needelman).) “The doctrine applies when (1) the issues decided in the prior adjudication are identical with those presented in the later action; (2) there was a final judgment on the merits in the prior action; and (3) the party against whom the plea is raised was a party or was in privity with a party to the prior adjudication.” (Ibid.) “The party asserting issue preclusion bears the burden of establishing these requirements.” (Ibid.)

To determine if the issue was decided in the prior action, the appellate court in Needelman v. DeWolf Realty Co., Inc. (2015) 239 Cal.App.4th 750, looked at the judgment and found that “the settlement agreement specifically, and unambiguously, provided that Needelman waived any causes of action related to any alleged wrongful eviction or related to his tenancy at the Greenwich apartment.” (Needelman, supra, 239 Cal.App.4th at p. 758.) Accordingly, the Needelman Court found that Needelman’s claims were barred because he could not relitigate claims that were within the scope of the stipulated judgment. (Id. at p. 759.)

Similarly, the Landeros Court looked at the stipulated judgment to see if collateral estoppel applied. The court found that the “stipulated judgment contains no language of comprehensive settlement of all matters between the parties arising from the lease.” (Landeros, supra, 39 Cal.App.4th at p. 1171.) “[T]he prior unlawful detainer judgment said nothing about plaintiffs' relinquishing any claims regarding the three-year period plaintiffs occupied the premises.” (Ibid.)

“‘[A]n unlawful detainer judgment has limited [preclusive] force because it typically follows a summary proceeding focused only on deciding a party's right to immediate possession of property.’” (Struiksma v. Ocwen Loan Servicing, LLC (2021) 66 Cal.App.5th 546, 554 (Struiksma) citing Gombiner v. Swartz (2008) 167 Cal.App.4th 1365, 1371.)

Here, the First UD Action concerned only possession of the premises from September 2021 to October 28, 2022, when the judgment was entered. (Defendants’ RJN Ex. 1-2; Plaintiff’s RJN Ex. 1-3.) The present action concerns breaches of the Lease beginning on or about March  2024. (See e.g. FAC.) Moreover, Defendants fail to show that the Parties in First UD Action intended the judgment to apply to Plaintiff’s current claims. “The judgment may be conclusive, however, with respect to one or more issues, if the parties have entered an agreement manifesting such an intention.” (Landeros, supra, 39 Cal.App.4th at p. 1172.)

Accordingly, Defendants fail to meet their burden of showing a breach of the Lease after 2022 was decided in the First UD Action and/or is barred by the judgment in the First UD Action.

The Second UD action concerned the issue of whether Defendants had paid rent for the period before June 17, 2022, when Plaintiff served the notice to pay rent or quit, and whether the notice was properly served on Defendants. (Plaintiff’s RJN Ex. 4-7.) Defendants fail to show that the Second UD Action decided issues concerning a breach of the Lease occurring on or before March 2024 or that the judgment in the Second UD Action barred this action.

Therefore, since the First and Second UD Actions involve different time periods and the adequacy of Plaintiffs’ notice to pay rent or quit, the two prior suits “involve different primary rights, they do not involve the same cause of action.” (Struiksma, 66 Cal.App.5th at p. 554.) Moreover, it would have been impossible for Plaintiff to litigate a breach of the Lease in the two prior actions, because a breach had not yet occurred. “[I[t would [also] be unfair to compel plaintiffs to litigate complex claims within the summary confines of an unlawful detainer proceeding.” (Id. at p. 557.)

For the reasons stated above, the court finds that Defendants have failed to carry their burden of showing that the present action is barred by the doctrines of collateral estoppel or res judicata. Therefore, the demurrers are overruled on the grounds that the action is barred by collateral estoppel or res judicata.

C.        1st Cause of Action – Breach of Written Lease

The elements of a claim for breach of contract are: “(1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant's breach, and (4) the resulting damages to the plaintiff.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal. 4th 811, 821.) In addition, the complaint must demonstrate damages proximately caused by the breach. (St. Paul Ins. v. American Dynasty (2002) 101 Cal.App.4th 1038, 1060.) Furthermore, “the complaint must [also] indicate on its face whether the contract is written, oral, or implied by conduct.” (Otworth v. Southern Pac. Transportation Co. (1985) 166 Cal.App.3d 452, 458-59 citing CCP, § 430.10(g).)

“If the action is based on alleged breach of written contract, the terms must be set out verbatim in the body of the complaint or a copy of the written agreement must be attached and incorporated by reference.” (Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299, 308.) Alternatively, “a plaintiff may plead the legal effect of the contract rather than its precise language.”¿ (Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 198-199.)¿¿“[A]ll essential elements of a breach of contract cause of action [] must be pleaded with specificity.”¿(Levy v. State Farm Mutual Automobile Ins. Co. (2007) 150 Cal.App.4th 1, 5.) 

Defendants in a conclusory fashion state the breach of contract action is uncertain, vague, and ambitious without explaining how or why the cause of action is uncertain, vague, or ambiguous. “A demurrer for uncertainty is strictly construed, even where a complaint is in some respects uncertain because ambiguities can be clarified under modern discovery procedures.” (Khoury v. Maly’s of California, Inc. (1993) 14 Cal.App.4th 612, 616.) A demurrer for uncertainty may only be sustained when a defendant cannot reasonably determine to what he or she is required to respond. (Ibid.) The court finds the claim that the first cause of action is uncertain, vague, or ambiguous is without merit.

Defendants assert that the breach of lease claim fails because Plaintiff failed to attach the four written Notices of Defaults. “Whether the plaintiff will be able to prove the pleaded facts is irrelevant to ruling upon the demurrer.” (Stevens v. Superior Court (1986) 180 Cal.App.3d 605, 609–610.)The written notices can be provided to Defendants through discovery and the fact that the written notices of default are not attached to the FAC does not mean that the breach of Lease claim is improperly pled.

The demurrer to the first cause of action is overruled.

D.        2nd Cause of Action – Declaratory Relief

To state a declaratory relief claim, the plaintiff must allege a proper subject of declaratory relief and an actual controversy involving justiciable questions relating to the party’s rights or obligations.  (See CCP, § 1060; Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 909.) 

Plaintiff’s request for declaratory relief ask the court to determine if Defendants properly exercised their option to renew the lease under Paragraph 52 given Defendant alleged breaches and defaults. (FAC, ¶¶ 55-65.) If the option was not exercised, the Lease expired on October 31, 2024; if it was properly exercised, the Lease was extended through October 31, 2029. (Id. ¶¶ 67-68.) “Plaintiff desires a declaration of its rights and duties, and particularly a declaration as to whether Defendants’ exercise of the option on April 1, 2024, when the Lease was in default, was valid or whether the term of the Lease expired on October 31, 2024.’ (Id. ¶ 69.)

Defendants fail to specifically demur to the second cause of action in their demurring papers and on Reply assert that the claim is uncertain without providing any substance for this proposition. The demurrer to the second cause of action is overruled.

E.        3rd Cause of Action – Trespass

“The elements of trespass are: (1) the plaintiff's ownership or control of the property; (2) the defendant's intentional, reckless, or negligent entry onto the property; (3) lack of permission for the entry or acts in excess of permission; (4) harm; and (5) the defendant's conduct was a substantial factor in causing the harm.” (Ralphs Grocery Co. v. Victory Consultants, Inc. (2017) 17 Cal.App.5th 245, 262.)   

Plaintiff’s trespass claim is premised on the argument that if Plaintiff is successful in showing that Defendant did not exercise the Option to renew, “Defendants will have exceeded Plaintiff’s permission to enter upon the Property.” (FAC, ¶ 73.) Plaintiff’s damages are “the sum of $8,536.90 per month, or $280.67 per day ($8,536.90 x 12/365 = $280.67), less any amounts paid by Defendants subject to proof, and restitution of the Property from Defendants.” (Id. ¶ 74.) This figure stems from “the reasonable value of the rents and profits of the Property is the approximate sum of $8,288.25 per month, plus a 3% annual cost of adjustment (of $248.65) which amounts to monthly rent of $8,536.90, as of November 1, 2024.” (Id. ¶ 80.)

If Plaintiff is correct that the Option to renew was not valid and the Lease expired on October 31, 2024, Defendants are “a holdover tenant or tenant at sufferance.” (Multani v. Knight (2018) 23 Cal.App.5th 837, 852.) “[T]he holdover tenant is liable for the value of the use and occupation of the premise during the time of holding over.” (Aviel v. Ng (2008) 161 Cal.App.4th 809, 820.) But if Plaintiff accepts rent, which the FAC purports that it will, “a month-to-month tenancy is created under the terms of the terminated lease.” (Id. citing Civ. Code, § 1945 [where lessee remains in possession after expiration of lease and lessor accepts rent, parties are presumed to have renewed lease on same terms, not exceeding one month where rent paid monthly].)

“‘Since the possession of the tenant at sufferance is wrongful, the owner may elect to regard the tenant as a trespasser....’ [Citation.] If instead the owner accepts rent from a tenant at sufferance he accepts the tenant's possession as rightful and the tenancy is converted into a periodic one.’” (Kaufman v. Goldman (2011) 195 Cal.App.4th 734, 740.) For the trespass claim to be sufficiently pled, Plaintiff must assert facts showing that Defendants are not holdover tenants and do not have the right to possess the property.

As to Defendants’ demurrer to the third cause of action, Defendants fail to explain why the claim is uncertain, vague, or ambiguous and what material factual allegations are missing that render the trespass claim insufficient as pled.

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

F.        4th Cause of Action – Ejectment

“The essential elements of an ejectment action are (1) the plaintiff's valid interest in the property and (2) the defendant's wrongful possession and withholding thereof.” (2710 Sutter Ventures, LLC v. Millis (2022) 82 Cal.App.5th 842, 866.)

As with the trespass claim, Plaintiff must allege facts to show that Defendants are not holdover tenants and that they do not have a possessory right to the Premises. As to Defendants’ demurrer to the fourth cause of action, Defendants fail to explain why the claim is uncertain, vague, or ambiguous and what material factual allegations are missing that render the ejection action insufficient as pled.

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

Conclusion

Defendants’ demurrer to the FAC, is overruled as to the first and second cause of action and

sustained with leave to amend the third and fourth causes of action. Plaintiff is granted 10 days

leave to amend. The court sets the OSC RE: Amended Complaint for May 2, 2025, at 8:30 a.m. 

The Case Management Conference is also continued to May 2, 2025, at 8:30 a.m. Defendants to

give notice.