Judge James C. Chalfant, Case 22STCP04207 2023-05-23 Tentative Ruling

Respondent California Department of Transportation (“Caltrans”) demurs to both causes of action in the First Amended Petition (“FAP”) filed by Petitioners Megeen McLaughlin (“Megeen”) and Ryan McLaughlin (“Ryan”) (collectively, “McLaughlins”). Caltrans also moves to strike portions of the FAP.

The court has read and considered the moving papers, oppositions, and replies,[1] and renders the following tentative decision.

Petitioner McLaughlins filed the Petition against Caltrans on November 29, 2022. The operative pleading is the FAP filed on February 7, 2023, alleging two causes of action for writ of mandate and injunction. The verified FAP alleges in pertinent part as follows.

The McLaughlins were tenants in good standing at 1110 Glendon Way (“Property”) from September 1991 to December 1999. FAP, ¶12. Megeen signed a lease for the Property on May 24, 1993. FAP, ¶13, Ex. 2. Her son Ryan was a minor at the beginning of this tenancy. FAP, ¶13.

By 1998, the Property was in negligent disrepair. FAP, ¶14. In Spring 1999, the “Historic Properties Tenants Association” notified Megeen by mail that Caltrans had developed a project to rehabilitate 80 historic homes along the 710 corridor route in Pasadena and South Pasadena. FAP, ¶15, Ex. 3. At the same time, Caltrans Property Manager Marilyn J. Lavender (“Lavender”) informed Megeen that the McLaughlins would be displaced from the Property so that Caltrans could renovate it to comply with historical property standards. FAP, ¶16.

To preserve her right to purchase the Property under the Roberti Law, Megeen agreed to move out only if Caltrans guaranteed to allow the McLaughlins to return after the renovations. FAP, ¶17. Caltrans agreed, and Lavender promised to provide a Memorandum of Understanding (“MOU”) to that effect soon after the McLaughlins vacated. FAP, ¶¶ 18, 24. Based on Caltrans’s representations, Megeen believed that the renovations would begin as soon as the McLaughlins vacated and would take only a year. FAP, ¶19. She also believed that the proposed renovations were the only way to restore the Property to an adequate living condition. FAP, ¶21. Thus, she agreed to temporarily vacate the Property. FAP, ¶21.

On December 2, 1999, shortly before the McLaughlins vacated the Property, Lavender presented Megeen a document entitled “Residential Claim for Moving Expense by Schedule or Actual Reasonable Cost” (“Moving Expense Sheet”). FAP, ¶23, Ex. 4. The Moving Expense Sheet listed Megeen and Ryan as claimants. FAP, ¶23, Ex. 4. Lavender handwrote “RAP” on top to demonstrate that the Moving Expense Sheet was for the Relocation Assistance Program. FAP, ¶23, Ex. 4. Megeen incorrectly signed the document where a Caltrans representative should sign it, below an acknowledgment that the document and supporting evidence complies with applicable provisions of Title 49 Code of Federal Regulations (“CFR”), Part 24. FAP, ¶23, Ex. 4.

The McLaughlins vacated the Property in the second week of December 1999. FAP, ¶22. By this point, Ryan was 18 years old. FAP, ¶13.

In January 2001, Lavender asked Megeen via phone if she had received the promised MOU. FAP, ¶25. Megeen replied that she was still waiting for it. FAP, ¶25.

In September 2022, the McLaughlins made public records requests to Caltrans for documents about their displacement from the Property. FAP, ¶31. Caltrans only produced the Moving Expense Sheet. FAP, ¶32, Ex. 4.

The McLaughlins made a public records request for documents concerning Caltrans’ rehabilitation efforts for the Property under the Secretary of the Interior’s Standards for Treatment of Historic Properties, 36 CFR, Part 68 (“Historic Property Standards”). FAP, ¶33. The only document provided was a Route 710 Historic Houses Condition Assessment Report (“Renovation Report”) from October 15, 2002. FAP, ¶33, Ex. 5. The 2002 Renovation Report shows that the Property in the same state of disrepair as when they vacated it. FAP, ¶33, Ex. 5. A repair estimate from May 23, 2012 (“Estimate”) shows the same improvements as the Renovation Report and indicates that Caltrans did not make any improvements in the ten years between the two documents. FAP, ¶34, Exs. 5-6. The rehabilitation project either no longer exists or no longer applied to the Property. FAP, ¶34.

Between 2000 and 2022, the McLaughlins’ replacement dwelling at 854 Bank Street. (“Bank Property”) had a new property manager once every 1-2 years. FAP, ¶35. Each manager inspected the Bank Property at least annually. FAP, ¶36. Each time there was a new manager, Megeen told that manager about the McLaughlins’ displacement and their intention to move back into the Property after its rehabilitation was complete. FAP, ¶37.

A repair report dated December 4, 2014[2], shows that Property manager Angus Chan (“Chan”) called for move-in repairs to the Property. FAP, ¶39, Ex. 7.

In June 2015, Chan became manager of the Bank Property. FAP, ¶38. Megeen told Chan about her intent to return to the Property. FAP, ¶38. Chan did not inform her that he was also manager of the Property, that the Property had been renovated for move-in purposes, and that it had not been renovated to comply with Historic Property Standards. FAP, ¶38. Had they known this, the McLaughlins could have asserted their right to move back in at that time. FAP, ¶38.

In November 2021, the City of South Pasadena (“City”) notified the McLaughlins that it planned to purchase vacant Caltrans-owned properties within City limits. FAP, ¶40. Megeen contacted then-Property manager Michael Means (“Means”) to assert the McLaughlins’ right to move back into the Property. FAP, ¶41. Later that month, Caltrans CFO Stephen Keck (“Keck”) helped the McLaughlins contact Caltrans program manager Carolyn Dabney (“Dabney”). FAP, ¶43. Dabney said that she would speak to Edward Francis (“Francis”), Caltrans Deputy Director of District 7, who had the final say on the issue. FAP, ¶44.

From November 2021 to August 2022, the McLaughlins attempted to contact Francis by telephone and email as they had yet to hear from Dabney. FAP, ¶45. In August 2022, Ryan explained the situation to Francis over the phone. FAP, ¶47. Although Francis found Ryan’s assertions believable, he was not familiar with Caltrans’s efforts to rehabilitate historic properties in that area. FAP, ¶47. Francis also informed Ryan that the Property was fully renovated and vacant, although it had been rented to a tenant for a short time. FAP, ¶47. This was the first that the McLaughlins learned that the Property was in “move in” condition. FAP, ¶48.

On September 14, 2022, Francis informed Ryan that he could not establish or confirm Megeen’s rights to the Property. FAP, ¶49. This was the first formal denial of the McLaughlins’ right to move back into the Property. FAP, ¶49.

On September 20, 2022, the McLaughlins filed a claim against Caltrans with the Department of General Services Office of Risk and Insurance Management (“General Services”). FAP, ¶50. In this claim, they sought to enforce Caltrans’s promise to allow them to move back into the Property after its restoration. FAP, ¶50. Caltrans did not respond to this within 45 days or thereafter. FAP, ¶51.

In 1990, Caltrans issued a guide entitled “Your Rights and Benefits as a Displacee Under the Uniform Relocation Assistance Program (Residential)” (“Caltrans Guide”). FAP, ¶10, Ex. 1. In the Caltrans Guide, Caltrans admits that it must abide by 49 CFR Part 24, which implements the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (“Uniform Act”). FAP, ¶10, Ex. 1, p. 2. Its objective is to ensure that persons displaced as a direct result of federal or federally assisted projects are treated fairly, consistently, and equitably so that such persons will not suffer disproportionate injuries from projects designed for the benefit of the public as a whole. FAP, ¶10, Ex. 1, p. 2.

The Caltrans Guide explains that eligible displaced individuals have a right to appeal any Caltrans decision about relocation benefits and eligibility. FAP Ex. 1. The Uniform Act guarantees the right to file an appeal with the head of the responsible agency if that person believes it has failed to determine the person’s eligibility or the amount of a payment authorized by the Act. Id. If the displaced individual expresses dissatisfaction with the determination either verbally or in writing, Caltrans will help file an appeal and explain the procedures to follow. Id.

The displaced individual will have a prompt and full opportunity to be heard, with the right to representation by legal counsel or another representative at the individual’s own expense. Id. Caltrans will consider all available information and provide a written determination with an explanation of the basis for the decision. Id. Caltrans will advise any dissatisfied individuals that they may seek judicial review. Id.

The Los Angeles County Department of Business and Consumer Affairs, Division of Housing Protections (“Housing”), defines a temporarily displaced tenant as one who must temporarily leave a unit for necessary repairs, rehabilitation via upgrades and repairs that increase product value, health and safety violations, or other work that cannot be completed while the tenant remains in the unit. FAP, ¶¶ 52-53, Ex. 8. When the McLaughlins vacated the Property, they met this definition because the cracked asbestos tiles and improper electrical grounding made repairs necessary to resolve health and safety violations. FAP, ¶54. Asbestos disposal could not occur with tenants in the house. FAP, ¶54. The renovations under the Historic Property Standards as originally intended also would have drastically increased the Property’s value. FAP, ¶54, Ex. 3.

In the first cause of action for mandamus, the McLaughlins allege that Caltrans has a ministerial duty to follow the law and deviated from the Uniform Act because it did not intend to permanently displace the McLaughlins from the Property. FAP, ¶59. Because Caltrans intended only to temporarily displace the McLaughlins, it did not adhere to the requirements of 49 CFR section 24.402(b)(1) concerning relocation benefits. FAP, ¶¶ 26-29. Caltrans also did not adhere to 49 CFR section 24.203(a) (1-3), which required Caltrans to give 90-day written notice of the McLaughlins’ eligibility for relocation assistance payments and advisory assistance of their rights as displaces and to relocation payments and replacement dwellings. FAP, ¶27.

Caltrans further did not adhere to 49 CFR section 24.204, which required Caltrans to provide the McLaughlins with a safe and sanitary replacement dwelling comparable to the Property. FAP, ¶28. While the Property is a 12 room, three-bathroom, four-bedroom, two-story house, the Bank Property has five rooms, two bedrooms, and one bathroom with no ventilation. FAP, ¶28. Megeen slipped, fell, and injured her wrist on the Bank Property’s gravel and dirt driveway. FAP, ¶28.

Caltrans also did not adhere to 49 CFR section 24.9, which required Caltrans to keep adequate records of its acquisition and displacement activities in sufficient detail to demonstrate compliance with the Uniform Act. FAP, ¶29. Caltrans was required to retain such records until three years after it paid relocation benefits to any displacee. FAP, ¶29. Because Caltrans never paid these benefits, it was required to retain these records and did not do so. FAP, ¶29.

Caltrans only complied with 49 CFR section 24.403(a)(1)(1970), which required it to pay the McLaughlins’ reasonable moving expenses. FAP, ¶30.

When it denied the McLaughlins the ability to return to the Property, Caltrans’ violated 49 CFR sections 24.203(a)(1)-(3), 24.402(b), 24.403(a)(1), and 24.9. FAP, ¶59. That decision was arbitrary, capricious, and an abuse of discretion that blatantly ignored the fact that the McLaughlins were displaced due to the renovations under the Historic Property Standards, which Caltrans discontinued. FAP, ¶63.

In the second cause of action for mandamus based on equitable estoppel, the McLaughlins allege that Caltrans knew about the efforts to rehabilitate properties to meet Historic Property Standards because it supervised those projects. FAP, ¶67. The McLaughlins believed that Caltrans intended to allow them to return to the Property because it had promised Megeen an MOU to that effect. FAP, ¶68. Caltrans also informed the McLaughlins that the displacement was solely to renovate the Property to comply with historic standards and never expressed an intent to demolish the Property or take it off the rental market. FAP, ¶68.

Until the notice from Francis in September 2022, the McLaughlins were unaware that Caltrans had completed any renovations that it would perform almost 20 years earlier and had temporarily rented the Property to someone else. FAP, ¶69. Until their public records request in October 2022, they were unaware that Caltrans had abandoned plans to rehabilitate the Property to comply with Historic Property Standards. FAP, ¶69. They were also unaware of their rights as displaces under the Uniform Act because Caltrans did not provide them with the advisory assistance that statute requires. FAP, ¶69.

The McLaughlins relied on Caltrans’s promises to their detriment because their replacement dwelling was smaller and less valuable. FAP, ¶70. If Caltrans chose to sell both properties under the Roberti Law, they would be the owners of the Bank Property, a less valuable home than the Property. FAP, ¶70.

The government may be bound by an equitable estoppel in the same manner as a private party when the elements requisite to such estoppel against a private party are present, and the injustice which would result from a failure to uphold an estoppel is of sufficient dimension to justify any effect upon public interest or policy which would result from the raising of an estoppel. FAP, ¶71. The failure to bind Caltrans through equitable estoppel would imply that state agencies that receive federal funding need not adhere to federal regulations, just as Caltrans here failed to comply with the Uniform Act. FAP, ¶73. It would also undermine taxpayer trust in Caltrans because the lack of accountability would encourage it to continue using bad faith tactics. FAP, ¶73.

The McLaughlins seek (1) a writ of mandate or injunction commanding Caltrans to allow them to return to the Property, (2) a preliminary injunction enjoining Caltrans from selling the Property during the pendency of this action, (3) an order that Caltrans honor the promise to allow the McLaughlins to return to the Property, and (4) attorney’s fees and costs. FAP Prayer, ¶¶ 1-4.

On November 30, 2022, the McLaughlins filed a lis pendens for the Property. They served Caltrans with the Summons, Petition, and lis pendens.

On March 1, 2023, the McLaughlins filed a second lis pendens for the Property.

Also on March 1, 2023, the court denied the McLaughlins’ ex parte application for a temporary restraining order (“TRO”) and order to show cause (“OSC”) re: preliminary injunction (“OSC”), ruling that the McLaughlins had provided no evidence that they qualify under the Roberti Law, they had delayed because they knew about the City’s attempts to buy the Property since September 2021, and there was no showing that a sale was eminent (and the McLaughlins would have to add the buyer as a party if there was).

On April 27, 2023, Caltrans filed an opposition to the McLaughlins’ ex parte application for leave to file a Second Amended Petition (“SAP”). Although no such application is on file, the court is scheduled to hear a motion for leave to amend the FAP on July 20, 2023.

Demurrers are permitted in administrative mandate proceedings. CCP §§1108, 1109. A demurrer tests the legal sufficiency of the pleading alone and will be sustained where the pleading is defective on its face.

Where pleadings are defective, a party may raise the defect by way of a demurrer or motion to strike or by motion for judgment on the pleadings. CCP §430.30(a); Coyne v. Krempels, (1950) 36 Cal.2d 257. The party against whom a complaint or cross-complaint has been filed may object by demurrer or answer to the pleading. CCP §430.10. A demurrer is timely filed within the 30-day period after service of the complaint. CCP § 430.40; Skrbina v. Fleming Companies, (1996) 45 Cal.App.4th 1353, 1364.

A demurrer may be asserted on any one or more of the following grounds: (a) The court has no jurisdiction of the subject of the cause of action alleged in the pleading; (b) The person who filed the pleading does not have legal capacity to sue; (c) There is another action pending between the same parties on the same cause of action; (d) There is a defect or misjoinder of parties; (e) The pleading does not state facts sufficient to constitute a cause of action; (f) The pleading is uncertain (“uncertain” includes ambiguous and unintelligible); (g) In an action founded upon a contract, it cannot be ascertained from the pleading whether the contract is written, is oral, or is implied by conduct; (h) No certificate was filed as required by CCP §411.35 or (i) by §411.36. CCP §430.10. Accordingly, 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. The face of the pleading includes attachments and incorporations by reference (Frantz v. Blackwell, (1987) 189 Cal.App.3d 91, 94); it does not include inadmissible hearsay. Day v. Sharp, (1975) 50 Cal.App.3d 904, 914.

The sole issue on demurrer for failure to state a cause of action is whether the facts pleaded, if true, would entitle the plaintiff to relief. Garcetti v. Superior Court, (1996) 49 Cal.App.4th 1533, 1547; Limandri v. Judkins, (1997) 52 Cal.App.4th 326, 339. The question of plaintiff’s ability to prove the allegations of the complaint or the possible difficulty in making such proof does not concern the reviewing court. Quelimane Co. v. Stewart Title Guaranty Co., (1998) 19 Cal.4th 26, 47. The ultimate facts alleged in the complaint must be deemed true, as well as all facts that may be implied or inferred from those expressly alleged. Marshall v. Gibson, Dunn & Crutcher, (1995) 37 Cal.App.4th 1397, 1403. Nevertheless, this rule does not apply to allegations expressing mere conclusions of law, or allegations contradicted by the exhibits to the complaint or by matters of which judicial notice may be taken. Vance v. Villa Park Mobilehome Estates, (1995) 36 Cal.App.4th 698, 709.

For all demurrers filed after January 1, 2016, the demurring party must meet and confer in person or by telephone with the party who filed the pleading for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer. CCP §430.31(a). As part of the meet and confer process, the demurring party must identify all of the specific causes of action that it believes are subject to demurrer and provide legal support for the claimed deficiencies. CCP §430.31(a)(1). The party who filed the pleading must in turn provide legal support for its position that the pleading is legally sufficient or, in the alternative, how the complaint, cross-complaint, or answer could be amended to cure any legal insufficiency. Id. The demurring party is responsible for filing and serving a declaration that the meet and confer requirement has been met. CCP §430.31(a)(3).

On March 6, 2023, Caltrans attempted to meet and confer on both motions via an email that explained all its proposed arguments. DiPietro Decl., ¶2, Ex. 1. In their response, the McLaughlins refused to amend the FAP. DiPietro Decl., ¶3, Ex. 1. Caltrans has satisfied the requirement to meet and confer.

The FAP alleges two causes of action for writ of mandate. Caltrans’ demurrer asserts that both causes of action are uncertain under CCP section 430.10(f) but fails to explain how. Dem. at 3. This issue is waived. The demurrer also contends that neither cause of action states facts sufficient to constitute a cause of action under CCP section 430.10(e). Dem. at 3.

In opposition, the McLaughlins attempt to present evidence. 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. The face of the pleading includes attachments and incorporations by reference (Frantz v. Blackwell, (1987) 189 Cal.App.3d 91, 94); it does not include inadmissible hearsay. Day v. Sharp, (1975) 50 Cal.App.3d 904, 914. The court has not considered any exhibits except those attached to the FAP. See Reply at 3.

Caltrans asserts that the FAP alleges that it violated the Uniform Act and contends, without citation to authority, that the Uniform Act does not apply to the State. The Uniform Act also only applies to permanently displaced persons. Yet, the FAP alleges that the McLaughlins were not permanently displaced and have a right to return to the Property. The Uniform Act excludes from the definition of “displaced person” any person who is not required to relocate permanently as a direct result of a project. 49 CFR §24.2(a)(9)(ii)(D). Additionally, to the extent that they seek recourse under the Uniform Act, the McLaughlins must plead exhaustion of the administrative remedies available under that law and have not done so. As a result, the demurrer should be sustained as to both causes of action. Dem. at 5-6.

As the opposition points out (Opp. at 4), the FAP generally does not plead that Caltrans violated the Uniform Act and seeks no relief under that law. Rather, the FAP relies on the Uniform Act to show that Caltrans did not intend to permanently displace the McLaughlins from the Property. If Caltrans had so intended, it would have violated the Uniform Act. FAP ¶¶ 26-30. Therefore, the FAP generally cites the Uniform Act in support of the McLaughlins’ position that their displacement was intended by Caltrans to be temporary so that the Property could undergo renovations to comply with the Historic Property Standards.

Despite the FAP’s general reliance on the Uniform Act as evidence, the first cause of action for mandamus does not have any legal basis other than a violation of the Uniform Act. The first cause of action alleges that Caltrans has a ministerial duty to follow the law and deviated from the Uniform Act because it did not intend to permanently displace the McLaughlins from the Property. FAP, ¶¶ 26-29, 59. When it denied the McLaughlins the ability to return to the Property, Caltrans’ violated the Uniform Act. FAP, ¶59. That decision was an abuse of discretion that ignored the fact that the McLaughlins were displaced due to the renovations under the Historic Property Standards, which Caltrans discontinued. FAP, ¶63.

The first cause of action cites no other legal basis for Caltrans’ ministerial duty. The first cause of action, therefore, is grounded in the Uniform Act, alleging that Caltrans’ failure to return the McLaughlins to the Property violated their rights under the Uniform Act.

With respect to the Uniform Act’s application to state action, the McLaughlins ask why Caltrans would cite the Uniform Act in the Caltrans Guide if the Uniform Act does not apply to state action? Dem. Opp. at 4. The Caltrans Guide cites 49 CFR section 24.1(b), which states that one purpose of the Uniform Act is to ensure that persons displaced as a direct result of federal or federally assisted projects are treated fairly, consistently, and equitably. FAP, ¶10, Ex. 1. The FAP alleges that Caltrans compelled the McLaughlins to vacate the Property so that it could renovate it to comply with Historic Property Standards pursuant to 36 CFR Part 68. FAP, ¶¶ 33, 54, Ex. 3. 36 CFR Part 68’s intent is to set forth standards for the treatment of historic properties and applies to all proposed grant-in-aid development projects assisted through the National Historic Preservation Fund. 36 CFR §§ 68.1. The determination whether the planned renovations to the Property were part of such a project and therefore “federally assisted”, and therefore whether the Uniform Act applies, is a factual inquiry that cannot be resolved on demurrer. The court must presume that the Uniform Act does apply to Caltrans’ actions in this case.

Caltrans is correct, however, that the first cause of action fails to plead exhaustion of administrative remedies. Where an administrative remedy is provided by statute, relief must be sought from the administrative body and this remedy exhausted before the courts will act. Mammoth Lakes Land Acquisition, LLC v. Town of Mammoth Lakes, (2010) 191 Cal.App.4th 435, 454. Exhaustion of the administrative remedy is a jurisdictional prerequisite to resort to the courts. Id.

Under regulations promulgated pursuant to the Uniform Act, when a person believes that an agency has failed to properly consider the person's application for assistance under the Uniform Act, the person may file a written appeal with the agency in question. 49 CFR §24.10(b). The agency may set a reasonable time limit to file such an appeal, but the time limit shall be no less than 60 days after written notification of the agency’s determination of the person’s claim. 49 CFR §24.10(c). The agency official conducting the review of the appeal shall be either the head of the agency or his or her authorized designee, provided that the official was not directly involved in the action appealed. 49 CFR §24.10(h).

The Caltrans Guide also explains that the Uniform Act entitles displaced individuals thereunder to appeal any determination of eligibility or payment amount. FAP Ex. 1. If the displaced individual expresses dissatisfaction with the determination either verbally or in writing, Caltrans will help file an appeal and explain the procedures to follow. FAP Ex. 1. After a prompt and full opportunity for the person to be heard, Caltrans will provide a written determination with an explanation of the basis for the decision. FAP Ex. 1. Caltrans will advise any dissatisfied individuals that they may seek judicial review. FAP Ex. 1.

The FAP alleges that the McLaughlins notified multiple Caltrans employees of their grievances. FAP, ¶¶ 43-44, 47-49. On September 20, 2022, the McLaughlins filed a claim against Caltrans with General Services. FAP, ¶50. Caltrans did not respond. FAP, ¶51. No one informed the McLaughlins of their right to appeal their eligibility and payment for displacement pursuant to the Caltrans Guide. Opp. at 5.

The pleaded facts are insufficient to exhaust administrative remedies. The Caltrans Guide states that a displace may appeal any Caltrans decision regarding relocation benefits and eligibility. FAP Ex. 1, p. 27. When the displace indicates dissatisfaction with a Caltrans decision, either orally or in writing, Caltrans will assist in filing an appeal. FAP Ex. 1, p. 28. Caltrans has made no decision concerning the McLaughlins’ eligibility and they have never expressed dissatisfaction with relocation benefits. Rather, they consistently have sought to return to the Property. Under the Caltrans Guide, the McLaughlins needed to seek benefits and file a written appeal with Caltrans if dissatisfied. The same is true under the Uniform Act. The McLaughlins must apply for assistance under the Uniform Act and, if dissatisfied with the decision, they may file a written appeal with Caltrans. See 49 CFR §24.10(b), (h).

The McLaughlins have not exhausted their administrative remedies for purposes of asserting a claim under the Uniform Act and Caltrans Guide and the demurrer is sustained for the first cause of action.

The second cause of action seeks relief under the doctrine of equitable estoppel.

The McLaughlins cite the Government Claims Act (Govt. Code §§ 810-996.6) to assert that their claim filed with General Services fulfilled their duty to exhaust administrative remedies. Dem. Opp. at 5.

Under the Government Claims Act, a plaintiff who brings suit for monetary damages against a public entity or its employees must first present a claim to the public entity, which must be acted upon or deemed rejected by the public entity. Govt. Code §§ 945.4, 950.2, 950.6(a). The claim requirement does not apply to liability based on contract or the right to obtain relief other than money or damages against a public entity or public employee. Govt. Code §814.

As Caltrans observes (Dem. at 6), the McLaughlins seek only specific performance of an agreement or promise to allow them to move back into their old residence. FAP Prayer, ¶¶ 1-3. Because they do not seek monetary damages, the Government Claims Act and its procedures are inapplicable. There is no administrative procedure that the McLaughlins were required to exhaust for the second cause of action.

Caltrans argues that the second cause of action is a disguised breach of oral contract claim that is barred by the statute of frauds. Dem. at 6.

The FAP seeks specific performance of a promise or oral agreement to allow the McLaughlins to return to the Property. FAP, ¶¶ 17-18; FAP Prayer, ¶¶ 1-3. The FAP alleges that Caltrans promised to provide an MOU of this agreement, but Megeen never received one. FAP, ¶¶ 18, 24-25, 68.

A contract coming within the statute of frauds is invalid unless it is memorialized by a writing subscribed by the party to be charged. Civil Code §1624; Secrest v. Security Nat. Mortg. Loan Trust 2002-2, (2008) 167 Cal.App.4th 544, 552. The statute of frauds applies to contracts that by their terms cannot be performed within one year. Civil Code §1624(a)(1); Foley v. Interactive Data Corp. (1988), 47 Cal. 3d 654, 671. When Megeen agreed to move out of the Property with Ryan, she believed that Caltrans would finish the necessary renovations in one year. FAP, ¶19. The agreement was not inherently one which required performance beyond one year.

The statute of frauds also provides that an agreement to lease a property for more than one year, or to sell real property, must be in writing. Civil Code §1624(a)(3). The FAP alleges that the Property is owned by Caltrans (FAP ¶3) and that the McLaughlins rented the Property at a monthly rent of $1,500 at the time of their displacement. FAP, ¶26. The FAP alleges that Caltrans agreed to allow the McLaughlins to move back into the Property after Caltrans finished its renovations, which the Megeen required to preserve her right to purchase the Property under the Roberti Law. FAP, ¶¶ 17-18. The agreement was not for an initial lease of the Property but to allow the McLaughlins to move back in and re-rent the Property. The parties’ agreement did not say how long the rental would be, presumably only until the McLaughlins could exercise their Roberti Law rights. Because the lease period could be for less than one year, the Civil Code section 1624(a)(3) requirement of a writing does not control.

In any event, equitable estoppel may preclude the use of the statute of frauds as a defense. Chavez v. Indymac Mortgage Services, 219 Cal. App. 4th 1052, 1058. The elements of estoppel as to a private party are: (1) the party to be estopped must be appraised of the facts; (2) he must intend that his conduct shall be acted upon, or must so act that the party asserting the estoppel had 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. Lentz, supra, 49 Cal.3d at 399; Driscoll v. City of Los Angeles, (1967) 67 Cal.2d 297, 305. The doctrine of equitable estoppel applies to a public entity when, in addition to the elements of equitable estoppel for a private entity, the injustice which would result from a failure to estop the agency is sufficient to justify any adverse effect upon public interest or policy which would result. City of Long Beach v. Mansell, (1970) 3 Cal.3d 462, 496-97.

The second cause of action asserts that this case meets all four elements. Caltrans’ moving papers do not dispute this contention.[3] The McLaughlins have pled sufficient facts for a claim of equitable estoppel against Caltrans and, in doing so, pled sufficient facts to withstand a statute of frauds defense.

The McLaughlins have pled sufficient facts for a claim of equitable estoppel against Caltrans and, in doing so, pled sufficient facts to withstand a statute of frauds defense.

A plaintiff must bring any action upon a contract, obligation or liability not founded upon an instrument of writing within two years. CCP §339(1).

Caltrans asserts that because the second cause of action seeks to enforce an oral agreement between the parties, the statute of limitations has passed. The statute of limitations for an oral contract is two years. CCP §339. A statute of limitations defense can be raised on demurrer if the complaint shows on its face that it is time-barred. Mitchell v. State Dept. of Public Health, (2016) 1 Cal.App.5^th 1000, 1007. The FAP alleges that when Megeen agreed to move out of the Property in 1999, she believed that the renovations would only take a year. FAP, ¶¶ 17-19. By 2000, Megeen had sufficient information to put a reasonable person on inquiry of the breach when she and her son were not permitted to move back in after a year. See Vera v. REL-BC, LLC, (“Vera”) (2021), 66 Cal. App. 5th 57, 69. The statute of limitations passed two years later in 2002. Dem. at 7.

Accrual occurs when the wrongful act is done, or the wrongful result occurs, and liability arises. Norgart v.Upjohn Co., (1999) 21 Cal.4^th 383, 397. The accrual takes place when the last element essential to the cause of action occurs. Fox v. Ethicon Endo-Surgery, Inc., (“Fox”) (2005) 35 Cal.4^th 797, 807. A limitations period “ordinarily commences at the time when the obligation or liability arises, regardless of the plaintiff’s ignorance of the cause of action. Utility Audit Co. v. City of Los Angeles, (2003) 112 Cal.App.4^th 950, 962. The statute of limitations generally begins to run when the breach occurs. Niles v. Louis H. Rapoport & Sons, (1942) 53 Cal.2d 644, 651. The discovery rule is an exception to this general rule and accrual of the cause of action is postponed until the plaintiff discovers, or has reason to discover, the cause of action. Fox, supra, 35 Cal.4^th at 807. The discovery rule applies when the injury or act causing the injury is difficult to detect, and can apply to a concealed breach of contract. Gryczman v. 4550 Pico Partners, Ltd, (2003) 107 Cal.App.4^th 1, 5 (discovery rule applied to breach of right of first refusal to purchase property where plaintiff was unaware the property had been conveyed to another).[4] The plaintiff must conduct a reasonable investigation after becoming aware of an injury and is charged with knowledge of what such an investigation would reveal. Fox, supra, 35 Cal.4^th at 808. To rely on the discovery rule, the plaintiff must plead facts setting forth ignorance of the breach at the time it occurred and the date of its discovery within the applicable limitations period. April Enters. v KTTV, (1983) 147 Cal.3d 805, 832.

Caltrans misinterprets the FAP’s allegations. Although Megeen believed the renovations would only take a year (FAP, ¶19), this timeframe was not part of the agreement. The parties only agreed that Megeen could return to the Property whenever the renovations were complete. FAP, ¶¶ 17-18, 24. The statute of limitations ran from the date when the McLaughlins could have discovered through reasonable diligence that Caltrans had finished the renovations and refused to permit them to return.

This lawsuit was filed on November 29, 2022. The FAP alleges that Caltrans breached the oral agreement when it finished the renovations but did not inform Megeen that she and Ryan could move back in. FAP, ¶38. In November 2021, the City notified the McLaughlins that it planned to purchase vacant Caltrans owned properties within City limits. FAP, ¶40. Between November 2021 and August 2022, the McLaughlins contacted several Caltrans employees to assert their rights to the Property. FAP, ¶¶ 41-45. In August 2022, Francis told Ryan that that the Property was fully renovated and vacant. FAP, ¶47. This was the first time the McLaughlins learned that the Property was in “move in” condition. FAP, ¶48.[5]

Additionally, as the McLaughlins argue (Opp. at 7-8), equitable estoppel can prevent Caltrans from asserting the statute of limitations defense. Equitable estoppel comes into play after the limitations period has run and addresses whether a party should be barred from asserting a statute of limitations defense because his conduct induced another into forbearing suit within the limitations period. Lantzy v. Centex Homes, 31 Cal. 4th 363, 383. Equitable estoppel is independent of the limitations period because it stems from the equitable principle that no man may profit from his own wrongdoing in a court of justice. Id.

Caltrans has failed to demonstrate that the two-year statute of limitations in CCP section 339(1) renders the stated facts insufficient to constitute a cause of action.

Caltrans asserts that Ryan lacks standing to raise either cause of action. Dem. at 8.

Caltrans notes that the FAP admits that Ryan was a minor when Megeen first rented the Property. FAP, ¶¶ 13, 49. The FAP alleges that Megeen agreed to move out of the Property only if Caltrans would allow her and her son to move back in after renovations. FAP, ¶17. Ryan was not a party to that agreement. Dem. at 8.

The McLaughlins cite the Moving Expense Sheet, which lists both Megeen and Ryan as claimants. FAP, ¶23, Ex. 4. Opp. at 9. That document only shows that Ryan was displaced from the Property along with Megeen and does not suggest that Ryan was a party to the agreement.

As Ryan was not a party to the agreement, he would only have standing if he is a third-party beneficiary. A contract, made expressly for the benefit of a third person, may be enforced by him at any time before the parties thereto rescind it. Civil Code §1559. The terms of the agreement must clearly manifest an intent to make the obligation inure to the benefit of the third party. Martin v. Bridgeport Community Ass'n, Inc., (2009) 173 Cal. 4th 1024, 1034. A court will examine both the contract’s express terms and the circumstances of the agreement to determine (1) whether the third party would in fact benefit from the contract, (2) whether a motivating purpose of the contracting parties was to provide a benefit to the third party, and (3) whether permitting a 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. Goonewardene v. ADP, LLC, (2019) 6 Cal. 5th 817, 830.

The McLaughlins assert that Ryan was harmed by Caltrans’s arbitrary and capricious decision to deny his return to the Property. If Caltrans sells it, Ryan would be the owner of the less valuable Bank Property. FAP, ¶70. There is a causal connection between Caltrans’s decision to displace Ryan and the subsequent harm. Dem. Opp. at 8.

These arguments demonstrate that Ryan would benefit from enforcement of the oral agreement but do not demonstrate that this benefit was a motivating purpose of the agreement. The argument was between Megeen and Caltrans, and her son Ryan would benefit only because he lives with her. Nor have the McLaughlins shown that permitting Ryan to bring suit would be consistent with the contract objectives and the parties’ reasonable objectives.

If a demurrer is sustained, the court may grant leave to amend the pleading upon any terms as may be just and shall fix the time within which the amendment or amended pleading shall be filed. CCP §472a(c). It is an abuse of discretion to grant a motion for judgment on the pleadings without leave to amend if there is any reasonable possibility that the plaintiff can state a good cause of action. Dudley, supra, 90 Cal. App. 4th at 260.

For both McLaughlins, the first cause of action is defective because it fails to allege exhaustion of administrative remedies under the Uniform Act. There is no prospect that the first cause of action can be revised to cure the defect.

For Ryan, both causes of action are defective because he has failed to demonstrate standing under the oral agreement the McLaughlins now seek to enforce. Ryan was not a party to the agreement, though he did help Megeen pursue her rights thereunder by explaining it to Francis. FAP, ¶47. Although the opposition presents arguments as to the harm Ryan will suffer from an adverse decision in this matter, it fails to establish standing based on this harm. Based on the arguments presented, the McLaughlins have failed to demonstrate a reasonable possibility that they can amend the FAP to show that Ryan has standing.

The demurrer to the FAP’s first cause of action is sustained without leave to amend as to both Petitioners. The demurrer to the second cause of action is sustained only as to Ryan. Leave to amend is denied.

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). CCP section 436 permits the court to strike out any irrelevant, false, or improper matter, as well as any part of any pleading not in conformity with an order of the court. Irrelevant matters are defined as those allegations that are not essential to the statement of a claim or that are neither pertinent nor supported by an otherwise sufficient claim. CCP §431.10(b).

The notice of motion to strike shall be given within the time allowed to plead, and if a demurrer is interposed, concurrently therewith, and shall be noticed for hearing and heard at the same time as the demurrer. CRC 3.1322(b). The notice of motion to strike a portion of a pleading shall quote in full the portions sought to be stricken except where the motion is to strike an entire paragraph, cause of action, count or defense. CRC 3.1322(a).

Caltrans moves to strike from the FAP as irrelevant (1) paragraphs 10, 26-30, 52-54, and 59, (2) page 12, lines 22-24 within paragraph 69, and (3) Exhibits 1 and 8. All the targeted sections concern allegations that the Uniform Act and that Caltrans breached its duties thereunder.

CCP section 436 permits the court to strike out any irrelevant, false, or improper matter, as well as any part of any pleading not in conformity with an order of the court. Irrelevant matters are defined as allegations that are not essential to the statement of a claim or that are neither pertinent nor supported by an otherwise sufficient claim. CCP §431.10(b).

Paragraph 10 introduces Exhibit 1, the Caltrans Guide that cites to the Uniform Act’s objective. FAP, ¶10, Ex. 1. It explains that the objective of the Uniform Act is to ensure that persons displaced as a direct result of federal or federally assisted projects are treated fairly, consistently, and equitably so that such persons will not suffer disproportionate injuries from projects designed for the benefit of the public as a whole. FAP, ¶10, Ex. 1, p. 2.

Paragraphs 52-54 and Exhibit 8 use Housing’s definition of a temporarily displaced tenant to assert that the McLaughlins fell under this definition when first displaced from the Property. FAP, ¶¶ 52-54, Ex. 8. Paragraphs 26-29 list the alleged violations of the Uniform Act that occurred if Caltrans converted them to permanently displaced tenants by refusing to let them move back into the Property. FAP, ¶¶ 26-30. Paragraph 59 summarizes the applicable sections of 49 CFR. FAP, ¶59.

Paragraph 69 is part of the FAP’s discussion of the second cause of action based on equitable estoppel. FAP, ¶¶ 66, 69. The targeted sentence asserts that the McLaughlins were unaware of the protections that they enjoyed under the Uniform Act because Caltrans did not provide them the advisory assistance that statute requires. FAP, ¶69.

There is no need to address Paragraph 59 as the demurrer to the first cause of action has been sustained. As stated ante, the FAP pleads sufficient facts to demonstrate that the Uniform Act would apply if Caltrans decided to vacate them from the Property and its non-compliance means that Caltrans did not so intend. Therefore, the motion to strike the remaining allegations is denied.

Caltrans asserts that the exhibits should be stricken because a complaint must allege ultimate facts, not evidentiary facts or conclusions of law. Krug v. Meeham, (1952) 109 Cal. App. 2d 274, 277. Reply at 2. Krug concerned the sufficiency of a pleading, and the court stated that it would disregard conclusions of law for that inquiry. 109 Cal. App. 2d at 277. A complaint must plead ultimate facts, but there is nothing inherently wrong with including references to the law.

[1] The McLaughlins fail to lodge courtesy copies of their oppositions in violation of the Presiding Judge’s First Amended General Order Re: Mandatory Electronic Filing. They are admonished to provide courtesy copies for all future filings.

[2] The FAP misquotes the date as December 14, 2014. FAP, ¶39.

[3] In reply, Caltrans argues that the McLaughlins were not ignorant of the true state of facts. The McLaughlins believed that the renovations keeping them out of the Property would be complete within a year. FAP, ¶19. Because they believed they could move back in by Spring 2000 but did not, they should have known that Caltrans had breached the agreement. At minimum, they should have inquired or driven past the Property to assess its condition. Reply at 4-5. Caltrans cannot raise this issue for the first time in reply, and it is waived. See Regency Outdoor Advertising v. Carolina Lances, Inc., (1995) 31 Cal.App.4th 1323, 1333.

[4] Vera discusses CCP section 338(d)’s three-year limitations period for actions on the ground of fraud or mistake. 66 Cal. App. 5th at 69. Unlike CCP section 339(1), section 338(d) has an express provision concerning the discovery rule. CCP §338(d). The Vera court held that actual knowledge of fraud or mistake is not required. 66 Cal. App. 5th at 69.

[5] The McLaughlins did not pursue their rights under the agreement except through inquiries to each Bank Property manager until 2021. Whether this is sufficient to demonstrate due diligence is an issue of fact that cannot be decided upon demurrer.