Judge: Holly J. Fujie, Case: 19STCVP00482, Date: 2023-05-05 Tentative Ruling

DEPARTMENT 56 JUDGE HOLLY J. FUJIE, LAW AND MOTION RULINGS. The court makes every effort to post tentative rulings by 5.00 pm of the court day before the hearing. The tentative ruling will not become the final ruling until the hearing [see CRC 3.1308(a)(2)], and are also available in the courtroom on the day of the hearing [see CRC 3.1308(b)]. If the parties wish to submit on the tentative ruling and avoid a court appearance, all counsel must agree and choose which counsel will give notice. That counsel must 1) call Dept 56 by 8:30 a.m. on the day of the hearing (213/633-0656) and state that all parties will submit on the tentative ruling, and 2) serve notice of the ruling on all parties. If any party declines to submit on the tentative ruling, then no telephone call is necessary and all parties should appear at the hearing in person or by Court Call. Court reporters are not provided, and parties who want a record of motions and other proceedings must hire a privately retained certified court reporter.

Case Number: 19STCVP00482    Hearing Date: May 5, 2023    Dept: 56

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT

AND RELATED CROSS-ACTIONS

            MOVING PARTY: Defendant/Cross-Complainant/Cross-Defendant City of Pomona (the “City” or “Pomona”)

RESPONDING PARTY: Defendant/Cross-Complainant/Cross-Defendant Real Party in Interest, Regency Outdoor Advertising, Inc. (“Regency”)

The Court has considered the moving, opposition and reply papers.

BACKGROUND

This action concerns billboard structures (the “Billboards”) located in Pomona that are operated by Regency.  On November 17, 2022, Regency filed a cross-complaint (the “XC”) alleging two causes of action for declaratory relief.  Only the first cause of action was alleged against the City.  On January 18, 2023, the Court granted the City’s motion to strike portions of the XC (the “XCMTS”) concerning the first cause of action on the grounds that the challenged portions of the XC did not allege a present controversy, and granted Regency 20 days leave to amend.  

On February 21, 2023, Regency filed the currently operative first amended cross-complaint (the “FAXC”) alleging: (1) declaratory relief; (2) declaratory relief; (3) breach of the implied covenant of good faith and fair dealing; (4) breach of contract; (5) unconstitutional takings; (6) negligence; (7) enforcement of equitable servitude; (8) breach of warranty; (9) fraud; and (10) negligent misrepresentation.

In relevant part, the FAXC alleges: On or about June 24, 1993, Pomona and Regency (the “Parties”) entered into a development agreement (the “Development Agreement”) under which Regency was permitted to erect the Billboards along freeways in Pomona.  (See FAXC ¶ 9, Exhibit A.)  The Development Agreement provided for a ten-year term which would automatically extend into a second ten-year term, and allowed subsequent extensions by the Parties’ mutual agreement.  (FAXC ¶ 13.)  Section IV.K of the Development Agreement, labeled “Supersedure by Subsequent Laws,” provided that if a federal or state law enacted after the Development Agreement’s execution precluded compliance with its terms, the provisions of the Development Agreement would be modified to the extent feasible to comply with such law.  (FAXC ¶ 14.)  The Development Agreement also provided for rights vested in Regency and provided that its provisions constituted covenants running with the land.  (See FAXC ¶ 16.) 

On November 1, 1993, the City adopted Proposition L, which added a provision to the Pomona Zoning Code (the “Zoning Code”) prohibiting new or structurally altered offsite billboards within the City.  (FAXC ¶ 27.) 

Before the Development Agreement’s second ten-year term expired, the Parties negotiated a proposed third extension of the Development Agreement through 2026, and on July 7, 2014, the City adopted Ordinance No. 4190, which approved a third extension for Regency to continue operating the Billboards.  (See FAXC ¶¶ 17-19.)  In reliance on the terms of the third extension and Ordinance No. 4190, Regency entered into new contracts for the use of the Billboards.  (See FAXC ¶ 18.)  Although the City had control over making the third extension effective, through its own delay, it failed to approve the extension before Development Agreement’s expiration.  (FAXC ¶ 21.)

Plaintiffs, who are competing billboard operators, filed a petition for writ of mandate (the “First Writ”) on August 13, 2014 to set aside Ordinance No. 4190 on the grounds that it violated Proposition L.  (FAXC ¶ 23.)  The City opposed the First Writ.  (Id.)  The Superior Court granted the First Writ in April 2017.  (Id.)  The City filed an appeal and on November 7, 2018, the appellate court affirmed the trial court’s decision, finding that the third extension of the Development Agreement constituted a new contract rather than an extension of the original Development Agreement because the original 20-year term passed before it was adopted.  (FAXC ¶ 24.) 

Regency seeks a declaration that: (1) the Billboards were legally installed under the laws that were in effect at the time of their installation; (2) the Billboards are “Legal Nonconforming Signs” as defined by section .503 of the Zoning Code; (3) since they are Legal Nonconforming Signs, the Billboards do not constitute “Illegal Signs” that require abatement under section .503-K-H of the Zoning Code; (4) the City agreed and promised that it would not seek to remove the Billboards after the adoption of Ordinance No. 4190, thereby promising Regency that it could continue operating the Billboards through June 24, 2026; and (5) the City is precluded from removing the Billboards until at least July 7, 2026 under the doctrines of estoppel and promissory estoppel.  (FAXC ¶ 40.)

The City filed a demurrer (the “Demurrer”) that challenges the sufficiency of each cause of action alleged against it in the FAXC on numerous grounds.  The City also filed a motion to strike (the “Motion”) portions of the FAXC.

DEMURRER

Meet and Confer

The meet and confer requirement has been met for the Demurrer and Motion.

Legal Standard

A demurrer tests the sufficiency of a complaint as a matter of law.  (Durell v. Sharp Healthcare (2010) 183 Cal.App.4th 1350, 1358.)  The court accepts as true all material factual allegations and affords them a liberal construction, but it does not consider conclusions of fact or law, opinions, speculation, or allegations contrary to law or judicially noticed facts.  (Shea Homes Limited Partnership v. County of Alameda (2003) 110 Cal.App.4th 1246, 1254.)  With respect to a demurrer, the complaint must be construed liberally by drawing reasonable inferences from the facts pleaded.  (Rodas v. Spiegel (2001) 87 Cal.App.4th 513, 517.)  Demurrers for uncertainty are disfavored.  (Chen v. Berenjian (2019) 33 Cal.App.5th 811, 822.)  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.  (Id.)  A demurrer will be sustained without leave to amend if there exists no reasonable possibility that the defect can be cured by amendment.  (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) 

New Claims Asserted in the FAXC

            As a preliminary matter, the City argues that the third through tenth causes of action were improperly added after the Court granted the XCMTS.  The Court agrees. 

Following an order sustaining a demurrer or a motion for judgment on the pleadings with leave to amend, the plaintiff may amend his or her complaint only as authorized by the court's order.  (Harris v. Wachovia Mortgage, FSB (2010) 185 Cal.App.4th 1018, 1023.)  The plaintiff may not amend the complaint to add a new cause of action without having obtained permission to do so, unless the new cause of action is within the scope of the order granting leave to amend.  (Id.)

            Here, the Court granted leave to amend allegations concerning the declaratory relief claim.  While the new claims arise out of the general same set of facts, they assert new bases for relief for which Regency did not obtain permission.  The Court therefore SUSTAINS the Demurrer to the third through eighth causes of action without leave to amend absent permission from the Court.

MOTION TO STRIKE

Legal Standard

Under California Code of Civil Procedure (“CCP”) section 435, subdivision (b), 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 of that pleading.  (CCP § 435, subd. (b).)  The court may, upon a motion, or at any time in its discretion, and upon terms it deems proper, strike: (1) any irrelevant, false, or improper matter inserted in any pleading; and (2) all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.  (CCP § 436.)  The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice.  (CCP § 437.)  In ruling on a motion to strike, courts do not read allegations in isolation.  (Clauson v. Superior Court (1998) 67 Cal.App.4th 1253, 1255.)  Courts read the allegations of a pleading subject to a motion to strike as a whole, all parts in their context, and assume their truth.  (Id.)  When the defect which justifies striking a complaint is capable of cure, the court should allow leave to amend.  (Perlman v. Municipal Court (1979) 99 Cal.App.3d 568, 575.)

First 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 Jolley v. Chase Home Finance, LLC (2013) 213 Cal.App.4th 872, 909.)  The fundamental basis of declaratory relief is the existence of an actual, present controversy over a proper subject.  (DeLaura v. Beckett (2006) 137 Cal.App.4th 542, 545.)  The court may sustain a demurrer on the ground that the complaint fails to allege an actual or present controversy, or that it is not justiciable.  (Id.) 

Declaratory relief operates prospectively, serving to set controversies at rest before obligations are repudiated, rights are invaded or wrongs are committed.  (Kirkwood v. California State Automobile Assn. Inter-Ins. Bureau (2011) 193 Cal.App.4th 49, 59.)  Thus, the remedy is to be used to advance preventive justice, to declare rather than execute rights.  (Id.)  In order to state a proper claim for declaratory relief, the plaintiff must assert “some recognized or cognizable legal theories” that are “related to subjects and requests for relief that are properly before the court.”  (See Otay Land Co. v. Royal Indemnity Co. (2008) 169 Cal.App.4th 556, 563.)

The doctrine of equitable estoppel is founded on concepts of equity and fair dealing.  (Attard v. Board of Supervisors of Contra Costa County (2017) 14 Cal.App.5th 1066, 1079.)  It provides that a person may not deny the existence of a state of facts if he intentionally led another to believe a particular circumstance to be true and to rely upon such belief to his detriment.  (Id.)  The elements of the doctrine are that: (1) the party to be estopped must be apprised of the facts; (2) he must intend that his conduct shall be acted upon, or must so act that the party asserting the estoppel has a right to believe it was so intended; (3) the other party must be ignorant of the true state of facts; and (4) he must rely upon the conduct to his injury.  (Id.)  Equitable estoppel will not apply against a governmental body except in unusual instances when necessary to avoid grave injustice and when the result will not defeat a strong public policy.  (Id.)  The existence of equitable estoppel generally is a factual question for the trier of fact to decide, unless the facts are undisputed and can support only one reasonable conclusion as a matter of law.  (Schafer v. City of Los Angeles (2015) 237 Cal.App.4th 1250, 1263.)  In a case involving equitable estoppel against the government, however, the existence of estoppel is in part a legal question to the extent it involves weighing policy concerns to determine whether the avoidance of injustice in the particular case justifies any adverse impact on public policy or the public interest.  (Id.)  A party faces daunting odds in establishing estoppel against a government entity in a land use case.  (Id. at 1264.)

The City argues that the allegations in the FAXC do not cure the defects of the allegations that were stricken from the XC because they do not properly identify a present controversy for declaratory relief, notwithstanding the addition of Regency’s allegations concerning equitable estoppel.

A development agreement is a legislative act that shall be approved by ordinance and is subject to referendum.  (Gov. Code § 65867.5, subd. (a).)  Here, the legislative act approving the Development Agreement’s extension was invalidated.  (See Citizens for Amending Proposition L v. City of Pomona (2018) 28 Cal.App.5th 1159, 1189-90.)  The FAXC fails to allege circumstances to allow imposing estoppel against a government entity.  The FAXC only alleges economic harm suffered by Regency as a result of the expiration of the Development Agreement, which is insufficient to constitute a grave injustice that does not defeat a strong public policy.  (See Schafer v. City of Los Angeles (2015) 237 Cal.App.4th 1250, 1263-65 (discussing application of estoppel in land use cases).)  The Court therefore GRANTS the Motion with 20 days leave to amend, although if Regency files an amended pleading that fails to sufficiently allege declaratory relief, the Court will consider sustaining future challenges to the pleading without granting further leave to amend.

Moving party is ordered to give notice of this ruling. 

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org.  If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar. 

  Dated this 5th day of May 2023