Judge Katherine Chilton, Case 22STLC02945 2022-07-28 Tentative Ruling

Judge: Katherine Chilton, Case: 22STLC02945, Date: 2022-07-28 Tentative Ruling

Case Number: 22STLC02945 Hearing Date: July 28, 2022 Dept: 25

PROCEEDINGS: DEMURRER

MOVING PARTY: Plaintiff/Cross-Defendant South Gate Pack N Ship, LLC

RESP. PARTY: Defendant/Cross-Complainant Liberty Plaza, LLC

DEMURRER

(CCP §§ 430.10)

TENTATIVE RULING:

Plaintiff/Cross-Defendant South Gate Pack N Ship, LLC’s DEMURRER to the Cross Complaint’s causes of action for (1) breach of contract (2) tortious interference with contractual relations and (3) trespass causes of action is OVERRULED.

SERVICE:

[ X ] Proof of Service Timely Filed (CRC, rule 3.1300) OK

[ X ] Correct Address (CCP §§ 1013, 1013a) OK

[ X ] 16/21 Court Days Lapsed (CCP §§ 12c, 1005(b)) OK

OPPOSITION: Filed on July 5, 2022. [ ] Late [ ] None

REPLY: None filed as of July 26, 2022. [ ] Late [X] None

ANALYSIS:

I. Background

On April 27, 2022, Plaintiff South Gate Pack N Ship, LLC (“Plaintiff” or “South Gate”) filed an action against Liberty Plaza, LLC (“Defendant” or “Liberty Plaza”) for breach of contract. The action stems from a written Retail Lease Agreement (the “Lease”) that governed South Gate’s lease of Defendant’s property located at 8330 Long Beach Boulevard, suite 110 (“Premises”). (Compl. ¶¶ 1, 6.)

On May 26, 2022, Defendant filed an Answer denying all allegations in the Complaint.

Defendant also filed a Cross-Complaint, concurrent with the Answer, against Plaintiff/Cross-Defendant South Gate and Cesar Caranza (“Caranza”) for (1) breach of contract, (2) tortious interference with contractual relations, and (3) trespass. (5-26-22 Cross-Complaint.) The Cross-Complaint stems from the Lease with South Gate and alleges that Cross-Defendant Caranza “personally guaranteed South Gate’s obligations set forth in the lease agreement.” (Cross. Compl. ¶ 6.)

On June 27, 2022, Plaintiff/Cross-Defendant South Gate filed a Demurrer without Motion to Strike (“Demurrer”) to the Cross-Complaint. South Gate notes that Defendant Caranza has not be served with the Cross-Complaint and therefore, does not join the Demurrer. (Demurrer p. 4, Fn. 1.) On July 5, 2022, Defendant/Cross-Complainant Liberty Plaza filed an Opposition to the Demurrer. No reply was filed.

II. Legal Standard

A demurrer is a pleading that may be used to test the legal sufficiency of the factual allegations in the complaint. (Code of Civ. Proc. § 430.10.) There are two types of demurrers – general demurrers and special demurrers. (See McKenney v. Purepac Pharmaceutical Co. (2008) 167 Cal.App.4th 72, 77.)

General demurrers can be used to attack pleadings for failure to state facts sufficient to constitute a cause of action or for lack of subject matter jurisdiction. (Code Civ. Proc. § 430.10(e); McKenney, 167 Cal.App.4th at 77.) Such demurrers can be used only to challenge defects that appear on the face of the pleading or from matters outside the pleading that are judicially noticeable; evidence or extrinsic matters are not considered. (Code of Civ. Proc. §§ 430.30, 430.70; Blank v. Kirwan (1985) 39 Cal.3d 311, 318; Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994.) For the purpose of testing the sufficiency of the cause of action, the Court admits the truth of “all material facts properly pleaded” and “matters which may be judicially noticed,” but does not consider contentions, deductions, or conclusions of fact or law. [Citation].” (Blank, 39 Cal.3d at 318; Aubry v. Tri-City Hospital Dist. (1992) 2 Cal. 4th 962, 966-67.) It gives these facts “a reasonable interpretation, reading it as a whole and its parts in their context.” (Ibid.). At the pleading stage, a plaintiff need only allege ultimate facts sufficient to apprise the defendant of the factual basis for the claim against him. (Semole v. Sansoucie (1972) 28 Cal. App. 3d 714, 721.) The face of the complaint includes exhibits attached to the complaint. (Frantz v. Blackwell (1987) 189 Cal.App.3d 91, 94.) "If facts appearing in the exhibits contradict those alleged, the facts in the exhibits take precedence." (Holland v. Morse Diesel Intern., Inc. (2001) 86 Cal.App.4th 1443, 1447.)

Special demurrers can be used to attack the pleadings on grounds that the pleading is uncertain, ambiguous, and unintelligible, or in a contract case, for failure to allege whether a contract is oral or written. (Code Civ. Proc., § 430.10(f).) However, special demurrers are not allowed in limited jurisdiction civil actions and any grounds for special demurrers must be raised as affirmative defenses in the answer. (Code Civ. Proc., § 92(c).)

Moreover, Code of Civil Procedure § 430.41 requires that “[b]efore filing a demurrer pursuant to this chapter, the demurring party shall meet and confer in person or by telephone with the party who filed the pleading that is subject to demurrer for the purpose of determining whether an agreement can be reached that would resolve the objections to be raised in the demurrer.” (Code Civ. Proc., § 430.41(a).) The parties are to meet and confer at least five days before the date the responsive pleading is due. (Code Civ. Proc., § 430.41(a)(2).) Thereafter, the demurring party shall file and serve a declaration detailing their meet and confer efforts. (Code Civ. Proc., § 430.41(a)(3).)

III. Discussion

A. Meet and Confer Requirement

As part of the Demurrer, South Gate attaches its counsel’s declaration attesting to efforts to meet and confer. (Demurrer p. 9, Newman Decl.) Counsel states that on June 22, 2022, he spoke with counsel for Liberty Plaza, David Selki, regarding the Demurrer but they were unable to come to a resolution. (Ibid. at ¶ 2.)

The Court finds that Counsel’s declaration satisfies the meet and confer requirement.

B. First Cause of Action – Breach of Contract

a. Defendant/Cross-Complainant Liberty Plaza’s Allegations

The Cross-Complaint alleges that “on or about 6/12/2015, South Gate entered into a lease agreement for the premises located at 8330 Long Beach Boulevard, suite 110 (hereinafter “premises”) for a term of five years (60 months) beginning on July 1, 2015 and ending on June 30, 2020.” (Cross. Compl. ¶ 6.) Defendant “Caranza personally guaranteed South Gate’s obligations set forth in the lease agreement.” (Ibid.) Pursuant to the Lease, Cross-Defendants agreed “to pay monthly base rent starting at $3,800.00 on August 1, 2015.” (Ibid. at ¶ 7.) The monthly rent could be increased each year by at least 5% based on the consumer price index. (Ibid.) Furthermore, tenant had to pay an additional advance to cover a portion of common area maintenance charges, which included “property taxes, insurance, cleaning, trash removal, utilities, landscaping, repairs, management fees, etc.” (Ibid. at ¶ 8.)

Liberty Plaza alleges that Cross-Defendants breached the Lease because of (1) failure to pay rent the last month of the Lease – June 2020, (2) failure to pay the advance payment of additional rent in the amount of $5,145.46 despite demands by Liberty Plaza, and (3) failure to pay the balance of additional rent despite demands by Liberty Plaza. (Ibid. at ¶¶ 9, 15-16.)

Liberty Plaza also alleges that Cross-Defendants breached the Lease “by failing to return the premises in the same condition as it was received.” (Ibid. at ¶¶ 10, 17.) The property was returned “with windows full of signs, labels and graffiti that had adhered to the glass” and South Gate had removed cabinetry that belonged to Liberty Plaza without permission. (Ibid.) As a result, Liberty Plaza “incurred $1,585.00 to remove all the items mentioned above from the windows and reapply the damaged or destroyed protective film according to proof at trial” in addition to the loss of the cabinetry valued “in excess of $5,000.” (Ibid.)

b. Plaintiff/Cross-Defendant South Gate’s Demurrer

South Gate demurs to Liberty Plaza’s breach of contract cause of action for failure to state facts sufficient to constitute a cause of action. (Demurrer p. 1.) South Gate argues that Liberty Plaza’s allegations contradict the express terms of the Lease, which states that the lease expired in April 2020; thus, South Gate cannot be held liable for not paying rent for June 2020. (Ibid. p. 4; Compl. p. 8, Ex. A – Section 2.1.)

South Gate also contends that it cannot have breached the contract because it left the premises in “excellent condition” and paid all rent due. (Demurrer p. 4.) Even if the premises were not left in good condition, it argues that Liberty had 30 days from receiving possession of the premises to deduct the cost of damages from the security deposit and pay the rest of the deposit to South Gate. (Demurrer p.4; Civ. Code § 1950.7(c)(3)). Since Liberty Plaza received the property in July 2020, it had until August 30, 2020, to deduct the amounts. (Demurrer p. 5.) Thus, Liberty Plaza cannot sue for the damages two (2) years after repossession of the premises. (Demurrer p. 5.)

c. Defendant/Cross-Complainant Liberty Plaza’s Opposition to Demurrer

In its Opposition to the Demurrer, Liberty Plaza argues that that the Lease expressly states that it began on July 1, 2015, and ended on June 30, 2020. (Opposition p. 7.) It argues that “allegations of the cross-complaint for breach of contract are clear and state all of the elements of the cause of action, namely an agreement, breach and damages” and determinations regarding the terms and duration of the lease agreement must be decided by the trier of fact at later stages of litigation. (Ibid.) Furthermore, Liberty Plaza states that it is not statutorily barred from recovering damages for breach of contract. (Ibid.)

d. Analysis

“To prevail on a cause of action for breach of contract, the plaintiff must prove (1) the contract, (2) the plaintiff's performance of the contract or excuse for nonperformance, (3) the defendant's breach, and (4) the resulting damage to the plaintiff. (Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186.) “A written contract may be pleaded either by its terms – set out verbatim in the complaint or a copy of the contract attached to the complaint and incorporated therein by reference – or by its legal effect. [Citations.] In order to plead a contract by its legal effect, plaintiff must ‘allege the substance of its relevant terms. This is more difficult, for it requires a careful analysis of the instrument, comprehensiveness in statement, and avoidance of legal conclusions.’ [Citation.]” (McKell v. Washington Mutual, Inc. (2006) 142 Cal.App.4th 1457, 1489.)

Here, the Court admits the truth of “all material facts properly pleaded” and gives these facts “a reasonable interpretation, reading it as a whole and its parts in their context.” (Blank, 39 Cal.3d at 318; Aubry, 2 Cal. 4th at 966-67.) First, Liberty Plaza has pleaded the existence of a written Lease Agreement between itself and Cross-Defendants. Although the Lease is not attached to the Cross-Complaint, it is part of the Plaintiff South Gate’s Complaint. (Compl. p. 8, Ex. A.) Second, Liberty Plaza has alleged sufficient facts regarding its performance of the contract and Cross-Defendant’s breach in failing to pay rent and failing to return the premises in the same condition as it was received. South Gate argues that it was not liable for rent for June 2020 because the terms of the Lease expressly state that it terminated in April 2020. (Compl. p. 13, Ex. A – Section 2.1.) However, the Summary of Lease Information states that the term of the Lease expires on June 30, 2020. (Compl. p. 10, Ex. A.) In ruling on a Demurrer, the Court does not make factual findings and cannot determine which date of termination controls the Lease. South Gate also demurs regarding Liberty Plaza’s allegation that it did not return the premises in the same condition as received. It demurs on the basis that Liberty Plaza was barred from bringing a lawsuit for these damages based on Civil Code § 1950.7(c)(3)). However, this section relates to the security deposit and does not bar the landlord from filing an action for damages. The Court cannot make any factual findings regarding condition of the premises and potential damages owed at this stage of the action. Finally, Liberty Plaza pleads facts sufficient to demonstrate that it may have incurred damages as a result of the breach of contract.

The Court finds that the Cross-Complaint contains allegations sufficient to support a breach of contract cause of action as the facts alleged show that Cross-Defendant breached an existing Lease Agreement and Cross-Complainant suffered damages as a result. Accordingly, the Court OVERRULES Cross-Defendant South Gate’s DEMURRER as to the first cause of action.

C. Second Cause of Action – Tortious Interference with Contractual Relations

a. Defendant/Cross-Complainant Liberty Plaza’s Allegations

Liberty Plaza alleges that after vacating the premises, Cross-Defendants “approached the then current tenants of the shopping center and enticed them to leave the center causing landlord to incur damages in the form of monetary and other forms of incentives to the other tenants in order to prevent them from leaving,” value of such damages to be determined at trial. (Cross Compl. ¶ 13, 21.)

b. Plaintiff/Cross-Defendant South Gate’s Demurrer

South Gate demurs to Liberty Plaza’s tortious interreference with contractual relations cause of action for failure to state facts sufficient to constitute a cause of action. (Demurrer p. 6.) First, South Gate argues that Liberty Plaza’s allegations are invalid because they “combine and conflate” Plaintiff/Cross-Defendant South Gate with Cross-Defendant Cesar Caranza. (Ibid.) South Gate argues that Liberty Plaza does not allege facts sufficient to “impose tort liability on South Gate, a separate and distinct corporate entity” based on Caranza’s alleged actions or to establish “‘alter ego’ liability” on a corporate entity. (Ibid.) Second, South Gate demurs to this cause of action because it states that Liberty Plaza has not made any allegations “that any conduct on the part of South Gate satisfied the third and fourth prongs [of the cause of action]: intending to induce a breach/disruption, and actual breach/disruption.” (Ibid. at 7.) South Gate contends that Liberty Plaza’s allegations that it “approached the current tenants of the shopping center and enticed them to leave” does not indicate that it induced the tenants to break their lease or that anyone did break their lease. (Ibid. at 7.) It claims that “simply ‘enticing’ a tenant to leave when the term of the lease expires is not tortious conduct.” (Ibid.)

c. Defendant/Cross-Complainant Liberty Plaza’s Opposition to Demurrer

In its Opposition, Liberty Plaza states that the Cross-Complaint alleges that “each of the cross-defendants, including the cross-defendants served as ROES herein, was the agent, employee, partner, or legal representative of the other cross-defendants and in doing the things alleged herein, was acting within the course and scope of such agency, employment, partnership, or representation.” (Opposition p. 6 (citing to Cross Compl. ¶ 5.))

Liberty Plaza also argues that its allegations are sufficient to establish a cause of action for tortious interference with the performance of a contract because the third parties in the case are tenants who have a valid contract with Liberty Plaza and South Gate knew that they were the tenants. (Ibid. at 8.) Furthermore, South Gate “incited the third party with the intent to disrupt the performance of third party lease agreement causing actual damages to Liberty.” (Ibid. at ¶ 8.)

d. Analysis

i. Agency

“An agent is one who represents another, called the principal, in dealings with third persons.” (Civ. Code § 2295.) Agency may be implied from the facts and proved by circumstantial evidence. (Tomerlin v. Canadian Indem. Co. (1964) 61 Cal.2d 638, 643–644.) Inferences may be drawn from the conduct of the parties. (Nichols v. Arthur Murray, Inc. (1967) 248 Cal.App.2d 610, 614.). “Agency need only be generally pleaded...” and “is an averment of an ultimate fact…” (Monarrez v. Auto. Club of So. Cal. (2012) 211 Cal.App.4th 177, 187.) “[T]he existence of an agency relationship is the ‘essential fact,’ and where alleged must be accepted as true.” (Blickman Turkus, LP v. MF Downtown Sunnyvale, LLC (2008) 162 Cal.App.4th 858, 886.)

South Gate demurs on the basis that Cross-Defendant Caranza’s actions cannot be attributed to a corporate entity without further allegations. Liberty Plaza contends that its allegations in the Cross-Complaint that “each of the cross-defendants, including the cross-defendants served as ROES herein, was the agent, employee, partner, or legal representative of the other cross-defendants and in doing the things alleged herein, was acting within the course and scope of such agency, employment, partnership, or representation” are sufficient to attribute each Cross-Defendant’s tortious acts to the other. (Opposition p. 6 (citing to Cross Compl. ¶ 5.))

The Court finds that, considering the low standard of pleading agency, Liberty Plaza sufficiently pleads those theories to extend an individual’s tort liabilities to the corporate entity Cross-Defendant.

ii. Tortious Interference with Contractual Relations

“The elements which a plaintiff must plead to state the cause of action for intentional interference with contractual relations are (1) a valid contract between plaintiff and a third party; (2) defendant’s knowledge of this contract; (3) defendant’s intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the contractual relationship; and (5) resulting damage.” (Pacific Gas & Electric Co. v. Bear Stearns & Co. (1990) 50 Cal.3d 1118, 1126 (internal citations omitted).)

“Because interference with an existing contract receives greater solicitude than does interference with prospective economic advantage, it is not necessary that the defendant’s conduct be wrongful apart from the interference with the contract itself.” (Quelimane Co. v. Stewart Title Guaranty Co. (1998) 19 Cal.4th 26, 55 (internal citations omitted).)

Having considered the allegations in the Cross-Complaint, the Demurrer, and the Opposition to the Demurrer, the Court finds that the Cross-Complaint states sufficient facts to support a cause of action for tortious interference with contractual relations. Liberty Plaza’s allegations that there would a be a valid contract with its tenants, that South Gate, as a former tenant, would be aware of this contractual relationship, and thereafter, acted in a manner to disrupt the contractual relations and caused a disruption that Liberty Plaza had to cure through financial incentives, are sufficient to state a cause of action for tortious interference with contractual relations.

The Court finds that the Cross-Complaint contains allegations sufficient to support a tortious interference with contractual relations cause of action. Accordingly, the Court OVERRULES Cross-Defendant South Gate’s DEMURRER as to the second cause of action.

D. Third Cause of Action – Trespass

a. Defendant/Cross-Complainant Liberty Plaza’s Allegations

Liberty Plaza alleges that several months after Cross-Defendants vacated the premises, they entered the center where the premises are located and “placed heavy duty chain and external lock upon the main doors to the premises preventing landlord from offering the premises to potential new tenants” and causing hardship to Liberty Plaza in removing the chain and lock. (Cross Compl. ¶¶ 12, 19.)

b. Plaintiff/Cross-Defendant South Gate’s Demurrer

South Gate demurs to Liberty Plaza’s trespass cause of action for failure to state facts sufficient to constitute a cause of action. (Demurrer p. 6.) South Gate argues that Liberty Plaza’s allegations are invalid because they “combine and conflate” Plaintiff/Cross-Defendant South Gate with Cross-Defendant Cesar Caranza. (Ibid.) South Gate argues that Liberty Plaza does not allege facts sufficient to “impose tort liability on South Gate, a separate and distinct corporate entity” based on Caranza’s alleged actions or to establish “‘alter ego’ liability” on a corporate entity. (Ibid.)

c. Defendant/Cross-Complainant Diffenderfer’s Opposition to Demurrer

In its Opposition, Liberty Plaza reiterates its allegations in the Cross-Complaint:

“Cross-complainant is informed and believes and based thereon alleges that each of the cross-defendants, including the cross-defendants served as ROES herein, was the agent, employee, partner, or legal representative of the other cross-defendants and in doing the things alleged herein, was acting within the course and scope of such agency, employment, partnership, or representation. Cross-complainant is further informed and believes and thereon alleges that each act of each cross-defendant was authorized or ratified by the other cross-defendants.”

(Cross-Compl. ¶ 5.)

d. Analysis

i. Agency

In the previous section, the Court set forth the principles of agency that must be pleaded in an initial pleading in order to survive a demurrer.

ii. Trespass

“The elements of trespass are: (1) the plaintiff's ownership or control of the property; (2) the defendant's intentional, reckless, or negligent entry onto the property; (3) lack of permission for the entry or acts in excess of permission; (4) harm; and (5) the defendant's conduct was a substantial factor in causing the harm.” (Ralphs Grocery Co. v. Victory Consultants, Inc. (2017) 17 Cal.App.5th 245, 262.)

The Cross-Complaint alleges that Cross-Defendants intentionally entered Liberty Plaza’s property, after their lease was over and they did not have permission to be on the premises, placed chain and lock on the main doors, thus causing hardship and harm to Liberty Plaza.

The Court finds these allegations sufficient to support a cause of action in trespass. Therefore, Cross-Defendant South Gate’s demurrer to the trespass cause of action is OVERRULED.

IV. Conclusion & Order

For the foregoing reasons, Plaintiff/Cross-Defendant South Gate’s Demurrer to the Cross Complaint’s (1) breach of contract, (2) tortious interference with contractual relations, and (3) trespass causes of action is OVERRULED.

Moving party is ordered to give notice.