Judge: Kenneth J. Medel, Case: 37-2023-00049108-CU-BC-CTL, Date: 2024-03-01 Tentative Ruling

SUPERIOR COURT OF CALIFORNIA,

DEPT.:

EVENT DATE:

EVENT TIME:

HALL OF JUSTICE

TENTATIVE RULINGS - February 29, 2024

03/01/2024  09:00:00 AM  C-66 COUNTY OF SAN DIEGO

JUDICIAL OFFICER:Kenneth J Medel

CASE NO.:

CASE CATEGORY:

EVENT TYPE:

CASE TITLE: CASE TYPE:

Civil - Unlimited  Breach of Contract/Warranty Motion Hearing (Civil) 37-2023-00049108-CU-BC-CTL SPECIALIZED WASTE SOLUTIONS INC VS 2100 HAFFLEY LOFTS LLC [IMAGED] CAUSAL DOCUMENT/DATE FILED: Ex

Parte Application - Other and Supporting Documents, 02/13/2024 Specialized's Motion to Consolidate is GRANTED and the Motion to Stay the UD is GRANTED conditioned upon a payment of rent by Specialized to 2100 Haffley Lofts, LLC. The Court will hear as to the proper amount of the payment of rent.

Plaintiff Specialized Waste Solutions filed a civil complaint on 11/9/23 against 2100 HAFFLEY LOFTS, LLC. related to property that they were leasing. The Complaint alleges 10 causes of action, including: 1) breach of contract; 2) declaratory relief; 3) breach of contract-damages; 4) fraudulent misrepresentation; 5) breach of implied covenant of good faith and fair dealing; 6) negligent misrepresentation; 7) unfair business practices; 8) nuisance; 9) negligence; 10) false promise; 11) breach of implied covenant of quiet enjoyment; 12) constructive eviction; 13) intentional interference with contractual relations; and 14) intentional interference with prospective economic advantage.

On 12/1/23, 2100 Haffley Lofts filed an unlawful detainer action, case number 37-2023-00051877-CU-UC-CTL [2100 Haffley Lofts, LLC v. Specialized Waste Solutions, Inc.] On February 1, 2024, counsel for Specialized appeared ex parte to deem this case and the UD Action related. (Rozmus Dec. ¶ 2.) At the hearing, counsel for 2100 HL requested a hearing date for the UD Action. (Id.) After the hearing, 2100 HL propounded discovery in the UD Action. (Id.) The Court set this matter for a formal hearing on Specialized's request to stay the UD and consolidate it into the first-filed civil matter.

Specialized is a waste management company. (Declaration of Jonathan Lisicki ('Lisicki Dec.') ¶2) Based on the allegations in the Complaint in the civil action, Specialized has very particular needs for where it can operate its business that limit its options – special zoning requirements and the need for rail access.

Originally Specialized was operating out of Lakeside, but needed more permanent location. Defendant's property in National City 'checked all the boxes' for Specialized's unique needs. Negotiations began with defendant in February, 2023 even before defendant owned the property. The property's prior used involved unspecified chemicals and the prior owner was in the process of remediating.

Specialized contends that defendant HL purported to disclose known Premises site contamination to Specialized. (Lisicki Dec. ¶12) However, HL failed to fully disclose asbestos contamination prior to Specialized entering into the Lease. (Lisicki Dec. ¶13) Specialized alleges that without full disclosure from 2100 HL, the parties entered into a sixty-four month lease on April 10, 2023.

According to Specialized, rent was not due under the lease until a defined 'Commencement Date' -'[t]he later of (i) the Acquisition Date [defined as the date on which Landlord acquires fee simple title to the Project] (as hereinafter defined), and (ii) Landlord's receipt of indoor air sampling results confirming no detections above applicable safety limits.' (Lisicki Dec. ¶¶14-16) Additionally, Specialized received a Right of First Refusal on the purchase of the Premises. (Lisicki Dec. ¶15h) This first right of refusal was significant to Specialized given the unique characteristics of this property – there are not many other Calendar No.: Event ID:  TENTATIVE RULINGS

3089579  25 CASE NUMBER: CASE TITLE:  SPECIALIZED WASTE SOLUTIONS INC VS 2100 HAFFLEY LOFTS LLC  37-2023-00049108-CU-BC-CTL options for Specialized's operations. (Apparently, Specialized signed a 'Commencement Date Certificate' that was attached as Exhibit F to the Lease – but claims it did so only because of necessary demands of defendant's lender. None of the occurrences listed on the Certificate had occurred, most importantly, 2100 HL's work being complete as defined in Section 1.3 of the Lease. (Id.) Despite the fact that the lease was not effective until a 'commencement date', Specialized and HL negotiated some form of 'early entry' and Specialized took possession of the premises.

Long story short – significant asebestos was found at the property in July and August, 2023 and Specialized learned that 2100 HL knew of the asbestos at the Premises and began to demand answers from 2100 HL about the extent of severe problem. (Lisicki Dec. ¶¶33-36) Specialized claims that HL agreed in August, 2023 to remediation and to re-build and deliver a new building. The abatement was a 'disaster' – apparently, defendant did not get proper permits from city. The National City fire inspector shut down the asbestos abatement and pulled the premises occupancy. (Lisicki Dec. ¶¶43-44; Germain Dec. ¶¶13-14) Specialized lost its fire insurance policy because there was no working sprinkler system on the Premises. (Lisicki Dec. ¶¶49, 56) Despite all this, Specialized paid a portion of the security deposition on September 15, 2023- $90,000.00 to 2100 HL. (Lisicki ¶¶50-52) Defendant then allegedly ran out of money and, according to Specialized, left all the issues to remediation to Specialized. (Lisicki Dec. ¶57; Germain Dec. ¶29) Defendant indicated that the best path forward was to sell the premises. Defendant began demanding rent payments. Specialized contends that it has no obligation to pay rent under the lease (because it has not 'commenced' as argued above).

Nonetheless, Specialized claims it has paid partial rent in November 2023 and seven months of taxes.

The civil lawsuit was filed in November, 2023. The UD case followed. Specialized wants the UD case 'stayed' and, alternatively, consolidated with the civil case.

The Court recognizes that the only issue on an unlawful detainer is possession and the aim of the unique statutory scheme is to restore possession. Cal. Code Civ. Proc. §§1161 and 1174; Markham v. Fralick (1934) 2 C2d 221; Knowles v. Robinson (1963) 60 C2d 620. Further, the statutory scheme is designed to provide for speedy disposition of unlawful detainer actions.

However, where significant issues in a related civil action impact the right to possession, courts can and should balance defendant's right to raise such matter defensively in the eviction action against the interest in preserving the summary nature of eviction. See Asuncion v. Superior Ct., 108 Cal. App. 3d 141, 145 (Ct. App. 1980) In this case, there are significant issues in the civil case related to possession. This matter and the later-filed UD Action concern common facts including alleged pre-lease misrepresentations related to known and undisclosed asbestos contamination, 2100 HL's alleged unpermitted construction work on the Premises causing it to be uninhabitable and lose its H3 occupancy, that the lease Commencement Date has not occurred at a minimum due to the air sampling and no rent is due, that 2100 HL has failed to perform its obligations, a contractual Right of First Refusal to purchase the Premises.

Further, the Court has considered the unique situation of the property for Specialized – the zoning requirements and rail issues. The risk of dispossession is significant for Specialized. The Court must balance defendant's landlord's right to a quick resolution under the UD statute against public policies furthered by protecting the defendant from eviction under the alleged defenses. See Asuncion at p.145.

As a practical matter, the compressed nature of the UD action would impact Specialized's right to defend possession. Id. Cases have held that deciding whether or not to stay an unlawful detainer action is akin to the preliminary injunction analysis, allowing the balancing of the equities. (Asuncion, supra, 108 Cal.App.3d at pp.146-47.) Balancing those equities favor consolidation and stay of the UD on the condition that a reasonable rent is paid during the litigation.

A stay of the UD Action or consolidation with this action will preserve the status quo and payment of rent for the term of the stay will lessen the prejudice to HL. The Lease was signed in April 2023 and the parties are nearly a year into the Lease. Based on the facts presented by Specialized, the premises still require significant remediation before any sale can occur and the property appears to be 'red-flagged' by the city.

The Court will hear from the parties as to the appropriate order on rent as a condition of any stay of the UD matter.

Calendar No.: Event ID:  TENTATIVE RULINGS

3089579  25