Judge Jill Feeney, Case Number: 22STCV28003, Date: 2023-07-11 Tentative Ruling

This is an action for breach of commercial lease. Plaintiff Hawkeye Entertainment, LLC entered into a lease agreement for a commercial space with Defendants before subletting the space to Plaintiff W.E.R.M. Investments LLC (WERM). Plaintiffs allege that Defendant Smart Capital, LLC and its principal, Defendant Michael Chang, attempted to interfere with WERM’s nightclub operations.

Plaintiffs move for a preliminary injunction enjoining Defendants from deviating from section 10.2 of their lease, which prevents them or their agents, contracts, servants, and employees from entering the premises unless they provide Plaintiffs with at least Twenty-Four (24) hour prior written notice, and (b) make good faith effort to coordinate such entry with Plaintiffs’ principals so as to minimize interference with Plaintiffs’ business operations.

The purpose of a preliminary injunction is to preserve the status quo pending final resolution upon a trial. (See Scaringe v. J.C.C. Enterprises, Inc. (1988) 205 Cal.App.3d 1536.) The status quo has been defined to mean the last actual peaceable, uncontested status which preceded the pending controversy. (14859 Moorpark Homeowner’s Assn. v. VRT Corp. (1998) 63 Cal.App.4th 1396. 1402.) Preliminary injunctive relief requires the use of competent evidence to create a sufficient factual showing on the grounds for relief. (See, e.g., ReadyLink Healthcare v. Cotton (2005) 126 Cal.App.4th 1006, 1016; Ancora-Citronelle Corp. v. Green (1974) 41 Cal.App.3d 146, 150.) Injunctive relief may be granted based on a verified complaint only if it contains sufficient evidentiary, not ultimate, facts. (See Code Civ. Proc. § 527(a).) For this reason, a pleading alone rarely suffices. (Weil & Brown, California Procedure Before Trial, 9:579, 9(ll)-21 (The Rutter Group 2007).) The burden of proof is on the plaintiff as moving party. (O’Connell v. Superior Court (2006) 141 Cal.App.4th 1452, 1481.) A plaintiff seeking injunctive relief must show the absence of an adequate damages remedy at law. (Code Civ. Proc. § 526(4); Thayer Plymouth Center, Inc. v. Chrysler Motors (1967) 255 Cal.App.2d 300, 307.)

The trial court considers two factors in determining whether to issue a preliminary injunction: (1) the likelihood the plaintiff will prevail on the merits of its case at trial, and (2) the interim harm the plaintiff is likely to sustain if the injunction is denied as compared to the harm the defendant is likely to suffer if the court grants a preliminary injunction. (Code Civ. Proc. § 526(a); Husain v. McDonald’s Corp. (2012) 205 Cal.App.4th 860, 866-67.) The balancing of harm between the parties “involves consideration of such things as the inadequacy of other remedies, the degree of irreparable harm, and the necessity of preserving the status quo.” (Husain, supra, 205 Cal.App.4th at 867.) Thus, a preliminary injunction may not issue without some showing of potential entitlement to such relief. (Doe v. Wilson (1997) 57 Cal.App.4th 296, 304.) The decision to grant a preliminary injunction generally lies within the sound discretion of the trial court and will not be disturbed on appeal absent an abuse of discretion. (Thornton v. Carlson (1992) 4 Cal.App.4th 1249, 1255.)

A preliminary injunction ordinarily cannot take effect unless and until the plaintiff provides an undertaking for damages which the enjoined defendant may sustain by reason of the injunction if the court finally decides that the plaintiff was not entitled to the injunction. (See Code Civ. Proc. § 529(a); Cal. Rules of Court, rule 3.1150(f); City of South San Francisco v. Cypress Lawn Cemetery Assn. (1992) 11 Cal.App.4th 916, 920.)

The following objections to the declaration of Adi McAbian are sustained (by paragraph): 6-7, 11, 11(b), 11(c-h), 15(a) through 15(h), 16, 18 (Plaintiff failed to identify the source of the information contained in the paragraph and the information provided is not clearly within the personal knowledge of the declarant; the statement as to the feelings of employees and guests is hearsay); and 19-28 (Plaintiff failed to identify the source of the information contained in the paragraphs and the information provided is not clearly within the personal knowledge of the declarant

Plaintiffs first argue that they are likely to prevail on the merits of their claim for breach of contract. Plaintiffs reiterate portions of their Complaint, alleging that Defendants breached the parties’ lease by interfering with Plaintiff’s use and enjoyment of the premises, failing to properly maintain and repair the premises, failing to secure an occupancy certificate, and preventing the renewal of Plaintiffs’ CUB.

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.)

Here, the Court previously found that Plaintiffs were likely to prevail on their breach of contract claims related to the CUB in its December 14, 2022 order granting Plaintiffs’ first preliminary injunction. Because the Court previously found that Plaintiffs were likely to prevail on their claims, Plaintiffs satisfy this factor.

Plaintiffs’ Complaint also alleges Defendants breached section 10.2 of the lease, which provides that Defendants may enter the premises following at least 24 hours of prior written notice and after Defendants made good faith efforts to coordinate entry so as to minimize interference with Plaintiffs’ business operations except in case of emergency. (Compl., ¶51.)

Plaintiffs provide the declaration testimony of WERM’s principal, Adi McAbian and security footage showing that on January 27, 2024, Defendant Chang entered the premises without notice. (Mcabian Decl., ¶11, Exhs. B, C.) Although Chang disputes Mcabian’s testimony, Chang’s testimony is not credible. Chang testifies that an emergency situation, a fallen ceiling tile which fell on January 20, 2024, allowed him to enter the premises without notice. (Chang Decl., ¶10.) However, Chang also testifies that he was in the building because the elevators were being repaired and entered the leased premises when he heard construction noise. (Id., ¶15.) This testimony is inconsistent with Chang’s previous testimony that he entered the premises due to an emergency situation because Chang testifies he entered the premises for entirely different reasons. Additionally, Chang testifies that Plaintiffs’ employee, Mejia, threw himself on the ground. (Id., ¶15.) However, footage of the incident from two views shows Chang pushing Mejia to the ground at about 7:50 p.m. (Mcabian Decl., Exh. B.) The Court finds that Chang’s testimony is not credible based on these inconsistencies. The footage and Mcabian’s testimony show that Chang entered the premises without notice in violation of the parties’ lease.

Chang’s argument that he was only in common areas of the building fails. The footage of the incident shows Chang entered the leased premises. McAbian’s testimony shows Plaintiffs did not have notice before Chang entered the leased premises. Thus, the evidence is sufficient to show that Plaintiffs have a likelihood of prevailing on their breach of contract claims related to section 10.2 of the lease.

Defendants’ argument that Plaintiffs installed light fixtures in violation of the lease also fails. The lease requires Defendants to provide 24 hours of notice before entering the leased premises. Should Defendants believe that Plaintiffs are in breach of the lease, Defendants may file a suit or a countercomplaint for breach of contract to test the veracity of their claims.

Plaintiffs also claim that Defendants’ conduct trespassing into the leased premises is interfering with their ability to do business. However, as will be discussed below, Plaintiffs provide no admissible evidence of Defendants’ conduct which interfered with their ability to do business.

Plaintiffs argue that they are likely to suffer irreparable harm if a preliminary injunction is not granted because WERM will continue to suffer from Chang’s persistent trespass into the leased premises. Plaintiffs argue that Chang’s persistent interference during business hours with patrons, agents, employees, and staff will discourage employees and customers from returning to the premises. Plaintiffs reference other alleged incidents, false reports, and lost business relationships described in McAbian’s declaration. (McAbian Decl., ¶¶22-29.) However, the Court sustained Defendants’ objections to these portions of the declaration. The statements are hearsay because they describe statements Chang made to others and events that McAbian would not have personal knowledge of, such as former clients’ decisions to cease relationships with WERM due to Defendants’ interference. Although the evidence was sufficient to show Chang entered the premises without notice in January 2024, the evidence is insufficient to show that Defendants will continue this behavior or that the incident will interfere with Plaintiffs’ ability to do business. Plaintiffs provide no other evidence of the other alleged incidents or their effect on Plaintiffs’ ability to do business. Plaintiff thus fails to show that they will be irreparably harmed if the motion is not granted.

Plaintiffs also argue that the safety of their employees, workers, and patrons must be protected by a preliminary injunction. Again, the evidence is insufficient to show that the safety of Plaintiffs’ employees, workers, and patrons will be threatened again because there is only evidence of the January 2024 incident. Additionally, Plaintiffs concede that the injured employee, Mejia, is seeking damages through his own counsel. (Reply, p.5.) Thus, there are other remedies available to the employee who was pushed to the floor by Defendant Chang either through a criminal prosecution, if one is brought, or a civil tort cause of action. Additionally, the employee may have a basis for seeking a civil restraining order. The other employee mentioned, Ferlito, has similar remedies available at law against Defendant Chang’s son.