Judge: John J. Kralik, Case: 22BBCV00019, Date: 2022-08-12 Tentative Ruling
Case Number: 22BBCV00019 Hearing Date: August 12, 2022 Dept: NCB
North Central District
|
diamond dreams production,
inc., et
al., Plaintiffs, v. Raffi paichuk, et
al., Defendants. |
Case No.: 22BBCV00019 Hearing
Date: August 12, 2022 [TENTATIVE] order RE: Demurrer |
BACKGROUND
A.
Allegations
Plaintiffs Diamond Dreams Production, Inc. (“DDP”) and Simin
Hashemizadeh (“Hashemizadeh”) allege that on March 25, 2015, DDP entered into a
written 5-year lease with Defendants Raffi Paichuk (“Paichuk”) and Silva
Baghdasarian (“Baghdasarian”) for the property located at 5535 Cahuenga Blvd.,
North Hollywood, California, and Hashemizadeh signed as a guarantor of the
lease. (Compl., ¶8.) Plaintiffs allege they entered into a 5-year
extension by executing a Notice of Election to Extend Term of Lease dated
December 20, 2019, extending the lease term from April 1, 2020 to March 31,
2025 following Defendants’ representations that they would assist, cooperate,
and sign the City of Los Angeles’ Application for Zoning Administration
Decision (“Application”) in order for DDP to use the property for “video
production.” (Id., ¶¶9-10.) Plaintiffs allege that on January 9, 2020,
DDP submitted the Application to Paichuk for signing, but Defendants refused to
sign the Application, such that they are breach of the Lease at paragraph 6.1
for their failure to consent to a reasonable variance of use of the property
for video production. (Id.,
¶¶11-14.) Plaintiffs allege that
Defendants failed to object in writing or deny the request within 7 days from
January 9, 2020. (Id., ¶¶15,
20.) Plaintiffs allege that the Lease
permitted the use of the property for video production because they had already
been using it for video production with Defendants’ knowledge and consent and
that the use of the property was permissible.
(Id., ¶¶16-18.)
Plaintiffs allege that on April 14, 2020, DDP wrote to Defendants
informing them of its inability to pay some portion of the rent due to the
pandemic, pursuant to Los Angeles County COVID-19 Protection for Commercial
Tenants, which was extended to January 31, 2022. (Id., ¶21.) DDP again wrote to Defendants on December 16,
2020, informing them of this protection and Plaintiffs paid approximately
$216,293.64 to Defendants in light of the COVID-19 Protection Resolution. (Id., ¶22.)
On August 4, 2021, Plaintiffs’ counsel wrote to Defendants demanding
that they cooperate with the Application for the use variance, but Defendants
failed to comply. (Id.,
¶23.)
Plaintiffs allege that on December 21, 2021, Defendants served 3
notices on Plaintiffs: (1) a Three-Day Notice to Pay Rent and Quit; (2) a
Notice of Belief of Abandonment; and (3) a California 24-Hour Notice to
Enter. (Id., ¶24.) On January 6, 2022, Plaintiffs’ counsel
emailed defense counsel informing them that Plaintiffs had not abandoned the
property, but they received no response.
(Id., ¶25.) On January 10,
2022, Plaintiffs allege that Defendants had wrongfully changed the locks, took
possession of the property, and constructively evicted Plaintiffs. (Id., ¶¶26, 30.)
The complaint, filed January 11, 2022, alleges causes of action for:
(1) constructive eviction; (2) violation of the Los Angeles County COVID-19
eviction mortarium; (3) breach of lease; (4) breach of covenant of good faith
and fair dealing; (5) interference with quiet enjoyment; (6) nuisance; (7)
abuse of process; (8) fraud; (9) negligent misrepresentation; (10) promissory
estoppel; (11) declaratory relief; and (12) injunctive relief.
B.
Relevant Background
On August 1, 2022, the Court granted Defendants’ special motion to
strike the 7th cause of action in the complaint and denied the
motion as to the 2nd cause of action.
C.
Demurrer on Calendar
On June 10, 2022, Defendants Paichuk and Baghdasarian filed a demurrer
to the complaint. On June 28, 2022,
Defendants filed an amended demurrer to the complaint. The Court will consider the merits of the
later-filed demurrer papers.
On July 29, 2022, Plaintiffs filed an opposition to the amended demurrer.
On August 4, 2022, Defendants filed a reply brief. In the reply brief to the demurrer, Defendants
state that possession has since been returned to Defendants by a judgment in an
unlawful detainer action. The case
number of the UD action is not provided.
DISCUSSION
Defendants demur to each cause of action alleged in
the complaint.
A.
1st cause of
action - constructive
eviction
Defendants demur to the 1st cause
of action, arguing that constructive eviction applies only to residential
properties and not to commercial properties. In opposition, Plaintiffs cite to Lee
v. Placer Title Co. (1994) 28 Cal.App.4th 503, where the Court of
Appeal found that the terms of the lease did not preclude Defendants from
asserting a defense of constructive eviction for Plaintiffs’
breach of the covenant of quiet enjoyment.
(Lee, supra, 287 Cal.App.4th at 511.)
The Court of Appeal found that the parties’ lease explicitly gave
defendant the right to quiet enjoyment of the premises and that the defendant
claimed the covenant was breached by the plaintiffs’ failure to remedy issues
in an adjoining business, which resulted in constructive eviction. (Id. at 512.)
In the Lease Agreement at section 38,
entitled “Quiet Possession,” the parties agreed that the lessee shall have
quiet possession and quiet enjoyment of the premises during the lease tern. (Compl., Ex. 1 [Lease Agreement at §38 on
page 15 of 17].) However, “constructive
eviction” is not a proper cause of action in the context of this case. Further, in their papers, both parties refer
to this cause of action in connection with a breach of the covenant of quiet
enjoyment. Plaintiffs have already
brought the allegations of this cause of action in its 5th cause of
action for interference with quiet enjoyment.
Thus, the Court will sustain the demurrer to
the 1st cause of action. The
Court will allow leave to amend to the extent that Plaintiffs may incorporate
and merge any of the facts alleged in the 1st cause of action into
the 5th cause of action.
B.
2nd cause of
action - violation
of the Los Angeles County COVID-19 eviction mortarium
Defendants demur to the 2nd cause
of action, arguing that it too is not a cause of action because the Legislature
did not expressly provide a private right of action for the enforcement of a
municipal code. They argue that the Los
Angeles Eviction Moratorium expired for commercial properties as of February
2022.
The argument regarding the expiration of the
eviction mortarium was previously raised in the special motion to strike. The Court notes in its order on the special
motion to strike that Defendants’ notices were issued prior to the expiration
of the eviction moratorium. Thus, this argument lacks merits.
In opposition, Plaintiffs ask the Court to
take judicial notice of its opposition to the special motion to strike and its arguments
contained therein about the 2nd cause of action. The Court notes
that Plaintiffs’ opposition to the special motion to strike does not discuss
whether the LAMC confers a private right of action for the enforcement of the
code. The complaint too does not provide
any legal grounds to show that violation of the LAMC provides a private right
of action.
As such, the demurrer to the 2nd
cause of action is sustained with leave to amend.
C.
3rd cause of
action - breach
of lease
The essential elements of a cause
of action 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
plaintiff.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.)
In the 3rd cause of action, Plaintiffs
allege that Defendants expressly warranted “quiet enjoyment” of the premises,
but Defendants breached the Lease Agreement by wrongfully taking possession of
the property when Plaintiffs had notified Defendants that Plaintiffs had not
abandoned the property. (Compl.,
¶¶47-48.) Plaintiffs also allege that
Defendants breached paragraph 6.1 by failing to cooperate with Plaintiffs to
obtain a variance from the City of Los Angeles so that it may use the property
for video production. (Id., ¶49.)
Defendants argue that the demurrer should be
sustained as to Defendant Silva
Baghdasarian because he is not a party to the Lease Agreement. However, as pointed out by Plaintiffs in
opposition, Baghdasarian is a signatory the lease extension addendum of the
Lease Agreement. (See Compl., Ex. 1 at
page 3.) Thus, the demurrer is overruled
as to this ground.
Next, Defendants argue that Plaintiffs fail to allege facts to support
the 2 breaches alleged. First, they
argue that Plaintiffs confusingly allege that they are still in possession of
the property (Compl., ¶59), but that Defendants breached the agreement by
wrongfully taking possession of the premises.
Paragraph 59 alleges in part that Defendants locked Plaintiffs out the
property and took possession of the property, and that Defendants knew or
should have known that Plaintiffs were still in possession of the
property. The allegations here are
sufficient to allege that Plaintiffs were in possession of the property when
Defendants allegedly interfered with the right to quiet enjoyment by locking
them out. Plaintiffs have adequately
alleged breach of this portion of the Lease Agreement. Thus, Plaintiffs have alleged a breach of the
Lease Agreement.
Second, Defendants argue that Plaintiffs have not adequately alleged
that Defendants breached the Lease Agreement by failing to cooperate with
Plaintiffs to obtain a variance form the City.
The Lease Agreement states that the “Agreed Use” of the premises was for
“Storage and other permissible related uses.”
(Lease Agreement, § 1.7.) The
parties agreed that Plaintiffs shall use and occupy the premises only for the
Agreed Use or any other legal use which is reasonably comparable thereto and
for other purposes. (Id., §
6.1.) The section also states that
Defendants/lessor shall not unreasonably withhold or delay the consent to any
written request for modification of the Agreed Use. (Id.)
In the complaint, Plaintiffs allege that they submitted an application
to use the property for video production, but Defendants failed to provide
their consent or their objection.
(Compl., ¶¶9-15.)
As currently alleged, the Court finds that the breach of contract cause
of action is adequately alleged. Thus,
the demurrer is overruled as to the 3rd cause of action.
D.
4th cause of
action - breach
of covenant of good faith and fair dealing
“There is an implied covenant of
good faith and fair dealing in every contract that neither party will do
anything which will injure the right of the other to receive the benefits of
the agreement.” (Comunale v.
Traders & General Ins. Co. (1958) 50 Cal.2d 654, 658.)
In the 4th cause of action,
Plaintiffs allege that Defendants breached the implied covenant of good faith
and fair dealing by failing to sign Plaintiffs’ application for a variance of
the use of the property for video production, making false representations that
they would cooperate with Plaintiffs to obtain the variance to induce
Plaintiffs to sign the lease extension, locking Plaintiffs out of the property,
and serving notices in violation of the COVID-19 eviction mortarium. (Compl., ¶53.) Plaintiffs allege they were damaged as a
result because they were deprived of the use and enjoyment of the property and
their business operations and have effectively been locked out of the
property. (Id., ¶54.)
Defendants argue that this cause of action
fails because the complaint fails to allege that Defendants prevented
performance under the agreement and Plaintiffs have not alleged causation and
damages.
Although the use of the premises does not
explicitly state that video production was an “Agreed Use” of the premises, the
Lease Agreement stated that Plaintiffs may request a modification of the Agreed
Use upon Defendants’ consent, so long as the use did not impair the structural
integrity of the improvements of the premises or the mechanical/electrical
systems therein, and was not significantly more burdensome to the premises. (Lease Agreement, § 6.1.) While Defendants
argue that they had no obligation to help Plaintiffs obtain a permit or with
the administrative process, Plaintiffs have at least alleged in the pleading
stage that the “Agreed Use” as defined in the Lease Agreement was for “Storage
and other permissible related uses” and that such ambiguously worded use is
ordinarily construed against the landlord and that Plaintiffs were already
using the premises for “video production with Defendants’ knowledge and consent
for 6 years. (Conpl., ¶¶17-18.) Accepting the allegations of the complaint as
true, Plaintiffs have alleged sufficient facts for a breach of the implied
covenant of good faith of good faith and fair dealing cause of action. Whether such a breach actually occurred will
be further determined upon the consideration of evidence at the summary
judgment or trial stage.
The demurrer to the 4th cause of
action is overruled.
E.
5th cause of
action - interference
with quiet enjoyment
In the complaint, Plaintiffs allege that Defendants
issued an improper notice of belief of abandonment to harass Plaintiffs, and
that Defendants knew or should have known that Plaintiffs had not abandoned the
property. (Compl., ¶¶31-32.) They allege that they provided notice to
Defendants that they were not paying rent based on the COVID-19
protections. (Id., ¶32.) Plaintiffs allege that they were still in
possession of the property and had stored their expensive personal property
there, and they did not take any action for Defendants to “reasonably” believe
that they had abandoned the property. (Id., ¶¶30-34.) They also allege in the 5th cause
of action that Defendants interfered with Plaintiffs’ quiet enjoyment of the
property during their leasehold term by locking them out of the property and
taking possession of the premises. (Id., ¶¶58-59.)
Defendants argue that they posted a notice
of belief of abandonment prior to entering the property, but Plaintiffs did not
provide correspondence in compliance with Civil Code, § 1953.35(b) that they had not
abandoned the property. However, this
argument includes extrinsic facts that the Court cannot consider at the
demurrer stage. A copy of Plaintiffs’
writing that they had not abandoned the property is not provided and, thus,
whether they did or did not provide correspondence in compliance with section
1953.35 cannot be ascertained at this time.
This argument is better raised at the summary judgment or trial stage
when the Court may consider the parties’ evidence.
As such, the demurrer to the 5th
cause of action is overruled. As
discussed above with respect to the demurrer to the 1st cause of
action, Plaintiffs may amend the 5th cause of action to incorporate
any facts alleged in the 1st cause of action.
F.
6th cause of
action- nuisance
Defendants argue that the 6th
cause of action fails for the same reason as the 5th cause of action
because Plaintiffs have not shown that they provided a proper response under
section 1951.35. For the same reasons
discussed above, the demurrer to the 6th cause of action is
overruled.
G.
7th cause of
action - abuse
of process
In light of the ruling on the special motion
to strike, the demurrer is moot as to the 7th cause of action.
H.
8th cause of
action – fraud
To allege a
cause of action for fraud, the requisite elements are: (1) a representation, usually of fact, which is
false; (2) knowledge of its falsity; (3) intent to defraud; (4) justifiable reliance upon the misrepresentation;
and (5) damage resulting from that justifiable reliance. (Stansfield
v. Starkey (1990) 220 Cal. App. 3d 59, 72-73.) This cause of
action is a tort of deceit and the facts constituting each element must be
alleged with particularity; the claim cannot be saved by referring to the
policy favoring liberal construction of pleadings. (Committee on Children's Television, Inc. v.
General Foods Corp. (1983) 35 Cal.3d 197, 216.) Since the claim must
be pleaded with particularity, the cause of action based on misrepresentations
must allege facts showing how, when, where, to whom, and by what means the
misrepresentations were tendered. (Stansfield
v. Starkey (1990) 220 Cal.App.3d 59, 73.)
In the complaint, Plaintiffs allege that on December 20, 2019, Defendants
falsely represented to Hashemizadeh that they would assist, cooperate, and sign
the City’s Application for Zoning Administration Decision in order for Plaintiffs
to use the property for video production.
(Compl., ¶¶9, 75.) Plaintiffs allege
that in reliance on Defendants’ representations, they executed a Notice of
election to Extend Term of Lease from April 1, 2020 to March 31, 2025. (Id., ¶76.) They allege that on January 9, 2020, they
submitted the Application for variance to Defendants, but Defendants did not
sign the Application. (Id., ¶¶77-78, 80.) Plaintiffs
allege that they reasonably relied on Defendants’ representation and had they
known Defendants lacked intent to sign the Application, they would not have
entered the Lease Extension. (Id., ¶¶79, 81.)
Here, the allegations allege when and to whom
the representations were made, but not how or by what means the representations
were made. Thus, the fraud cause of
action is not pled with the requisite specificity. In opposition, Plaintiffs argue they can clarify
upon amendment that the representations were orally made. (Opp. at p.6.)
Defendants also argue that section 22 of the
Lease Agreement applies. Section 22
states that the lease contains all the agreements of the parties and no other
prior or contemporaneous agreement or understanding shall be effective. However, this cause of action is based on
Defendant’s allegedly fraudulent conduct that induced Plaintiffs to sign the
lease extension. Thus, this cause of
action is not necessarily precluded by section 22 of the Lease Agreement. The
demurrer on the basis of merger is overruled.
The demurrer to the 8th cause of
action is sustained with leave to amend.
I.
9th and 10th
causes of action - negligent misrepresentation and promissory estoppel
Defendants argue that the 9th and
10th causes of action are barred by the Lease Agreement’s merger
clause. As this is the sole basis for the demurrer, the Court overrules the
demurrer on this basis for the same reasons discussed above.
The demurrer to the 9th and 10th
causes of action is overruled.
J.
11th and 12th
cause of action - declaratory
relief and injunctive relief
In opposition, Plaintiffs state that they
“now wish to clarify that they do not
intend to assert separate causes of action for declaratory or injunctive relief
since Defendants have already wrongfully obtained a lockout of the premises,
but reserve their right to amend their Complaint and pursue such relief to the
extent encompassed by Plaintiffs remaining claims in this litigation.” (Opp. at p.12.)
Thus,
the demurrer to the 11th and 12th causes of action is
sustained without leave to amend. If Plaintiffs intend to allege the 11th
cause of action, they may bring a motion for leave to amend for the Court’s
consideration. With respect to the 12th cause of action, the Court
notes that injunctive relief is a remedy and not a cause of action. (Shell
Oil Co. v. Richter (1942) 52 Cal.App.2d 164, 168.)
CONCLUSION AND ORDER
Defendants’ demurrer to the
complaint is sustained with 20 days leave to amend as to the 1st
(subject to the Court’s limitation in the written order), 2nd, and 8th
causes of action. The demurrer is
overruled as to the 3rd, 4th, 5th, 6th,
9th, and 10th causes of action. The demurrer is moot as to the 7th
cause of action in light of the Court’s ruling on the special motion to
strike. The demurrer to the 11th
and 12th cause of action is sustained without leave to amend,
subject to the Court’s limitation in the written order.
Defendants shall provide
notice of this order.