Superior Court of California 

County of Los Angeles 

Department 78 

 

LARCHMONT VILLAGE PLAZA, LLC; 

 

Plaintiff, 

 

vs. 

 

HING WA LEE, INC., et al.;  

 

Defendants. Case No.: 23STCV08622  

Hearing Date: Friday, December 29, 2023  

 

CROSS-DEFENDANTS’ DEMURRER TO DEFENDANT/CROSS-COMPLAINANT HING WA LEE, INC.’S CROSS-COMPLAINT  

 

The Cross Defendants’ Demurrer to the first cause of action and the third cause of action of the Cross-Complaint is overruled.

The Cross-Defendants’ Demurrer to the second cause of action is sustained with leave to amend.

If Cross-Complaint/Defendant Hing Wa Lee, Inc. wishes to file a first amended cross-complaint to cure the noted deficiencies, it must file and serve the pleading within 20 days after the date of this order.

Moving party to provide notice and to file proof of service of such notice within five court days after the date of this order. 

FACTUAL BACKGROUND

This is a complaint for breach of lease. Plaintiff Larchmont Village Plaza, LLC (“Plaintiff”) alleges the following against Defendant Hing Wa Lee, Inc (and Doe Defendants): On August 29, 2022, the parties entered into two lease agreements: a Standard Multi-Tenant Shopping Center Lease – Net for Suites 112-113 (the “Suites 112-113 Lease”) and a Standard Multi-Tenant Shopping Center Lease – Net for Suite 114 (the “Suite 114 Lease”) (collectively, “Leases” or “Lease”). However, rather than taking possession of the premises, Defendant planned a retail jewelry operation in a competing location across the street. 

The basis of the cross-complaint is as follows: Cross-Defendants advertised the subject lease. Defendant intended to purchase the nearby building so Cross-Defendants offered a contingent lease agreement wherein Cross-Defendants represented that Defendant had authority to refuse to allow Plaintiff to move the Occupying Tenant. (Cross-Complaint ¶ 7.) That way, if Defendant was able to close on its purchase of the property across the street, Defendant could get out of the leases by refusing to grant Plaintiff’s the right to move the Occupying Tenant. However, Cross Defendants later refused to follow Defendant’s instruction not to move the middle tenant. 

PROCEDURAL HISTORY

 

On April 18, 2023, Plaintiff filed suit against Defendant for two causes of action (COAs): 

1. Breach of Suites 112-113 Lease

2. Breach of Suite 114 Lease

On May 17, 2023, Defendant filed a cross-complaint against CBRE Inc. and Zachary Alexander Card (collectively, “Cross-Defendants”) for the following COAs:

1. Breach of Fiduciary Duty; 

2. Fraud; and

3. Indemnification

On May 19, 2023, Defendant filed its answer to Plaintiff’s Complaint.

On July 12, 2023, Plaintiff filed a ‘Notice of Errata Re Plaintiff Larchmont Village Plaza, LLC’s Complaint for Breach of Lease,’ noting that Plaintiff inadvertently omitted the Leases from its complaint. 

On October 11, 2023, Cross-Defendants filed the instant demurrer to Defendant’s Cross-Complaint. 

On December 4, 2023, Defendant filed its opposition to the cross-complaint. 

On December 21, 2023, Cross-Defendants filed their Reply. 

DISCUSSION  

 

Demurrer

Cross-Defendants demur to each COA pursuant to California Code of Civil Procedure sections 430.10 subdivisions (e) and (f). (Demurrer p. 2:7-8.) 

A demurrer may be asserted when the pleading does not state facts sufficient to constitute a cause of action and/or when the pleading is uncertain. (Code Civ. Proc., § 430.10(e), (f), respectively.) In assessing the pleading, the grounds for a demurrer must appear on the face of the pleading or from judicially noticeable matters. (Code of Civ. Proc. § 430.30(a); Blank v. Kirwan (1985) 39 Cal.3d 311, 318.) “Face of the complaint” includes matters shown in exhibits attached to the complaint and incorporated by reference. (Frantz v. Blackwell (1987) 189 Cal.App.3d 91, 94.) 

Request for Judicial Notice (RJN)

Cross-Defendants move for judicial notice of Plaintiff’s Complaint and Plaintiff’s July 12, 2023 Notice of Errata pursuant to Evidence Code section 452 subdivisions (d) and (h).

Judicial notice may be taken of the underlying lease agreements pursuant to Evidence Code section 452 subdivision (h). In its opposition, Defendant HWL does not dispute the authenticity of these leases which were attached to the Plaintiff’s complaint. If there is such a dispute, Defendant HWL should so indicate at the hearing on the demurrer. 

The RJN is granted. 

First COA for Breach of Fiduciary Duty

The elements of breach of fiduciary duty are (1) existence of a fiduciary relationship; (2) breach; and (3) damages proximately caused by the breach. (O'Neal v. Stanislaus County Employees' Retirement Assn. (2017) 8 Cal.App.5th 1184.) 

The pertinent allegations comprising this cause of action are that Cross-Defendants allegedly breached their fiduciary duty to Defendant HWL by (1) knowingly failing to obtain informed consent to act as a dual agent; (2) knowingly failing to disclose all information regarding the leases to Defendant; and (3) knowingly making misrepresentations to entice Defendant to enter into the leases for financial gain by Cross-Defendants. (Cross-Complaint ¶¶ 12, 13.) 

With respect to knowingly failing to obtain informed consent to act as a dual agent for both Defendant HWL and Plaintiff, Cross-Defendants contend that the facts alleged in the cross-complaint demonstrate that Defendant HWL knew that CBRE also represented Plaintiff because Defendant HWL learned of the premises at issue based upon an advertisement that CBRE placed on behalf of Plaintiff. However, that fact does not mean that Cross-Defendants in fact obtained informed consent. The allegation is certainly sufficiently pled for demurrer purposes.

With respect to the allegations regarding failure to disclose all pertinent lease terms to Defendant HWL and knowingly making misrepresentations to entice Defendant HWL to enter into the leases, Cross-Defendants claim that the lease terms foreclose these theories of liability..

According to Section 53, Plaintiff had the “sole and absolute discretion” in determining the terms and conditions relating to moving the Occupying Tenant “to [Plaintiff’s] satisfaction.” (See RJN p. 41 of 163 of PDF.) 

However, the provision focuses on Plaintiff’s effort to unencumber Suite 113 (i.e., move the Occupying Tenant). Put differently, the fact that section 53 does not mention the alleged veto contingency does not mean that it was not discussed. That said, Cross-Defendants point to two other places in the leases which prohibit the consideration of extraneous terms when interpreting the leases—Sections 2.4 and 22. (Demurrer p. 5.)

Section 2.4 provides that neither party has “made any oral or written representations, promises or warranties with respect to said matters other than as set forth in this Lease.” (RJN p. 25 of 163 of PDF.) Second, Section 22 of the leases is an integration provision, providing that “[t]his Lease contains all agreements between the Parties with respect to any matter mentioned herein, and no other prior or contemporaneous agreement or understanding shall be effective.” (RJN p. 33 of 163 of PDF.) 

The court does not see how these lease provisions prevent, as a matter of law, a cause of action against Cross-Defendants acting as Defendant HWL’s own broker under the theories espoused.  

The demurrer is overruled as to the first cause of action.

1. Second COA for Fraud  

The elements of fraud are: (1) a representation, (2) that is false, (3) made with knowledge of its falsity, and (4) with an intent to deceive, coupled with (5) actual detrimental reliance and (6) resulting damage. (Lim v. The.TV Corp. Internat. (2002) 99 Cal.App.4th 684, 694.)

The court agrees that Defendant did not adequately plead reasonable reliance and did not meet the heightened standard of pleading required for fraud. 

Therefore, the court sustains the demurrer as to the second cause of action with leave to amend.

2. Third COA for Indemnification 

The elements of a cause of action for equitable indemnity are (1) a showing of fault on the part of the indemnitor, and (2) resulting damages to the indemnitee for which the indemnitor is ... equitably responsible. (Bailey v. Safeway, Inc. (2011) 199 Cal.App.4th 206, 217.) Importantly, where parties have contracted regarding indemnification, it precludes a claim for equitable indemnity. (Demurrer p. 10, citing McCrary Constr. Co. v. Metal Deck Specialists, Inc. (2005) 133 Cal.App.4th 1528, 1536 [“Where, as here, the parties have expressly contracted with respect to the duty to indemnify, the extent of that duty must be determined from the contract and not by reliance on the independent doctrine of equitable indemnity.”].) 

Defendant alleges that “[d]ue to Cross Defendants’ fraud committed upon [Defendant], [Defendant] sustained loss as claimed by Plaintiff in this case. [Defendant] is entitled to claim for indemnification for any and all damages owed to Plaintiff as a result of this lawsuit.” (Cross-Complaint ¶17.) 

Defendant argues that Section 8.7 of the leases requires Defendant HWL to indemnify CBRE for any claims in connection with a breach of the lease by Defendant HWL. That section reads as follows.

8.7 Indemnity. Except for Lessor's gross negligence or willful misconduct, Lessee shall indemnify, protect, defend and hold harmless the Premises, Lessor and its agents, Lessor's master or ground lessor, partners and Lenders, from and against any and all claims, loss of rents and/or damages, liens, judgments, penalties, attorneys' and consultants' fees, expenses and/or liabilities arising out of, involving, or in connection with, a Breach of the Lease by Lessee and/or the use and/or occupancy of the Premises and/or Project by Lessee and/or by Lessee's employees, contractors or invitees. If any action or proceeding is brought against Lessor by reason of any of the foregoing matters, Lessee shall upon notice defend the same at Lessee's expense by counsel reasonably satisfactory to Lessor and Lessor shall cooperate with Lessee in such defense. Lessor need not have first paid any such claim in order to be defended or indemnified

This provision does not indicate that Defendant HWL (the Lessee) cannot sue its own broker for indemnification. 

Therefore, the demurrer is overruled as to this cause of action.

DATED:  December 29, 2023  

________________________________ 

Hon. Jill Feeney  

Judge of the Superior Court