Judge: Kristin S. Escalante , Case: 22STCV07406, Date: 2023-04-25 Tentative Ruling

Case Number: 22STCV07406    Hearing Date: April 25, 2023    Dept: 24

The Motion to Conduct Financial Discovery; reservation no.: 329184807677 filed by Plaintiffs Alma Delia Carranza Sot , Britney Jimate, Lizbeth Jimate, Maria Guadalupe Soto, and Gilberto Ramirez on 03/29/2023 is GRANTED.

Plaintiffs Alma Delia Carranza Soto (“Soto”), Britney Jimate (“Britney”), Lizbeth Jimate (“Lizbeth”), Maria Guadalupe Soto (“Maria”), and Gilberto Ramirez (“Ramirez”) (collectively “Plaintiffs”) move for an order granting permission to conduct financial discovery of Defendant Mario Ramos (“Defendant”). (Notice of Mtn., at p. 2.) Plaintiffs move on the grounds that they are likely to prevail on their claim for punitive damages and may conduct financial discovery under Civil Code section 3295 (“Section 3295”). (Notice of Mtn., at p. 2.)

By way of background, this is a habitability case. Plaintiffs allege that Defendant knowingly and illegally rented out as residential unit an addition (“addition”) to a house located at 14210 West Raven Street, Sylmar CA 91342 (“subject property”). The addition was not permitted. During the period Plaintiffs rented the addition Defendant failed to maintain it in a habitable condition including failure to maintain the plumbing, improper electrical, cockroach infestation, cracked flooring, and general dilapidation. The City of Los Angeles Department of Building and Safety (“LADBS”)inspected the unit and issued a substandard order declaring it unfit for living. Defendant then attempted force Plaintiffs to vacate, however, due to the COVID-19 Pandemic, Plaintiffs needed to remain in the unit. Defendant then shut off Plaintiff’s water until the police ordered him to turn it back on and then shut of just the hot water. 

Discussion

Section 3295 prevents pre-trial discovery of a party’s financial condition relevant to a Section 3294 claim for punitive damages. However, subsection (c) enables a plaintiff to move for a court order permitting discovery “if the court finds, on the basis of the supporting and opposing affidavits presented, that the plaintiff has established that there is a substantial probability that the plaintiff will prevail on the claim pursuant to Section 3294.” (Civ. Code, § 3295, subd. (c).) “Such order shall not be considered to be a determination on the merits of the claim or any defense thereto and shall not be given in evidence or referred to at trial.” (Ibid.) “In this context, a substantial probability of prevailing on a claim for punitive damages means that it is very likely that the plaintiff will prevail on such a claim or there is a strong likelihood that the plaintiff will prevail on such a claim. [Citation.]” (I-CA Enterprises, Inc. v. Palram Americas, Inc. (2015) 235 Cal.App.4th 257, 283 [Internal quotations omitted].)

To state a claim for punitive damages under Civil Code section 3294, a plaintiff must allege specific facts showing that the defendant has been guilty of malice, oppression, or fraud.  (Smith v. Superior Court (1992) 10 Cal. App. 4th 1033, 1042.)  The basis for punitive damages must be pled with specificity; conclusory allegations devoid of any factual assertions are insufficient. (Id.) A motion to strike may lie where the facts alleged, if proven, would not support a finding that the defendant acted with malice, fraud or oppression.  (Turman v. Turning Point of Central California (2010) 191 Cal. App. 4th 53, 63.)

Oppression is “despicable conduct with a willful and conscious disregard for the rights or safety of others.”  (Code Civ. Proc. § 3294, subd. (c)(1).)  The term “despicable” has been defined in the case law as actions that are “base,” “vile,” or “contemptible.” (See, e.g., Shade Foods, Inc. v. Innovative Products Sales & Marketing, Inc. (2000) 78 Cal. App. 4th 847, 891.) Malice is “conduct which is intended by the defendant to cause injury to the plaintiff or despicable conduct which is carried on by the defendant with a willful and conscious disregard of the rights or safety of others.” (Code Civ. Proc. § 3294, subd. (c)(2).) Malice may be proved either expressly through direct evidence or by implication through indirect evidence from which the jury draws inferences. (Angie M. v. Superior Ct. (1995) 37 Cal. App. 4th 1217, 1228) Fraud is “an intentional misrepresentation, deceit or concealment of a material fact known to the defendant with the intention on the part of the defendant of thereby depriving a person of property or legal rights or otherwise causing injury. (Code Civ. Proc. § 3294, subd. (c)(3).) 

To prove that a defendant acted with “willful and conscious disregard of the rights or safety of others,” it is not enough to prove negligence, gross negligence or even recklessness.  (Dawes v. Superior Court (1980) 111 Cal.App.3d 82, 87.) Rather, a plaintiff must plead and prove that the defendant either acted intentionally or was aware of the probable dangerousness of his or her conduct and willfully and deliberately failed to avoid those consequences. (Taylor v. Superior Court (1979) 24 Cal. 3d 890, 895.) Further, the allegedly despicable actions must be the actions that caused the alleged injury.

Plaintiffs’ punitive damages claims are premised on the second (breach of implied warranty of habitability), and sixth (intentional misrepresentation) causes of action.

1. Breach of Implied Warranty of Habitability

To state a claim for the breach of implied warranty of habitability, plaintiff must show “the existence of a material defective condition affecting the premises' habitability, notice to the landlord of the condition within a reasonable time after the tenant's discovery of the condition, the landlord was given a reasonable time to correct the deficiency, and resulting damages.” (Erlach v. Sierra Asset Servicing, LLC (2014) 226 Cal.App.4th 1281, 1297.)

Plaintiffs allege Defendant’s addition was substandard—including defective plumbing, improper electrical, cockroach infestation, water damage, and dilapidation–Defendant was aware of the substandard conditions and refused to cure the defects to the addition. (Compl., ¶¶11, 31-36.)

In Stoiber v. Honeychuck (1980) 101 Cal. App. 3d 903, 920, the court held that a claim for punitive damages was adequately alleged when the complaint alleged that “defendant had actual knowledge of the defective conditions in the premises including leaking swage, deteriorated flooring, falling ceiling, leaking roof, broken windows and other unsafe and dangerous conditions” and that defendant “acted with full knowledge of the consequences thereof and the damage being caused to plaintiff, and their conduct was willful, oppressive and malicious.”  Plaintiff has alleged similar facts here, and thus has adequately stated a claim for punitive damages.  (See also Smith v. David (1981) 120 Cal. App. 3d 101, n.3 [punitive damages available for intentional tortious breach of the warranty of habitability].)

In support of the punitive damages allegations Plaintiffs submit declarations from Soto and Kevin Hermansen. Soto declares that she and her family rented the addition beginning in March 2019. (Soto Decl., ¶2) In April 2021, LADBS inspected the unit and issued an order to comply with the Los Angeles Municipal Code. (Soto Decl., ¶8, Ex. A [Order to Comply].) Two months later the Los Angeles Housing Department issue a notice to Defendant to comply with LABDS’s order and to provide Plaintiff with relocation fees to comply. (Soto Decl., ¶11, Ex. B [Notice].) During the tenancy Soto made numerous requests to Defendant to remedy problems with the lack of heating, defective plumbing, improper electrical, and insect infestations. (Soto Decl., ¶12.) Defendant, in turn, stated he would repair the defective conditions, but then refused to do so. (Soto Decl., ¶12) Additionally, Defendant turned off the boiler which provide Plaintiffs with hot water and refused to turn it back on for ten months after Soto inadvertently notified the city of the illegal addition by requesting information about why she was not receiving her mail. (Soto Decl., ¶1) Defendant also removed the door separating Plaintiffs unit from his unit despite Soto’s protesting. (Soto Dec., ¶18.) Eventually, Soto called the police who informed Defendant he could not remove the door. (Soto Decl., ¶19.) Hermansen then attaches a photo of the ripped down door to his declaration and states that he arrived at the addition the day Defendant tried to rip down the door and advised Soto to call the police. (Soto Decl., ¶4, Ex D, [Photograph].)

In rebuttal Defendant argues that Plaintiff’s evidence is insufficient. The court disagrees. Plaintiffs’ evidence is sufficient to establish there is a strong likelihood that they will prevail on such a claim. (I-CA Enterprises, Inc. v. Palram Americas, Inc. (2015) 235 Cal.App.4th 257, 283 [Internal quotations omitted].) In particular, the Order to Comply from the LABSC demonstrates that as of at least May 19, 2021, Defendant was aware of a portion of the problematic conditions in the home, which have not been remedied. It states the addition was unapproved, needed to be remodeled to sealed doorway between the main dwelling and the addition, needed to have code compliant plumbing, electrical and HVAC, and needed to have a permit for the gas piping in the living room. (Soto Decl, Ex. A. at pp. 1-2.) Furthermore, Defendant’s argument that he did not build the unit is irrelevant, as he is the person who leased the unit to Plaintiff. He does not dispute Plaintiffs’ allegation that he knew the addition was unpermitted. He also does not dispute Soto’s statements regarding his knowledge of the plumbing issues and the cockroach infestation. Instead, Defendant dispute through his declaration whether he knew of the water heating issue. (Ramos Decl., ¶ 6.) However, the evidence supporting Defendant’s awareness of the other conditions—regardless of the water heating issue—are sufficient to show Plaintiff is likely to prevail on such a claim.

2. Intentional Misrepresentation

“The elements of fraud, which give rise to the tort action for deceit, are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.” (Lazar v. Superior Court (1996) 12 Cal. 4th 631, 638.) “[F]raud must be pled specifically; general and conclusory allegations do not suffice. . . .This particularity requirement necessitates pleading facts which show how, when, where, to whom, and by what means the representations were tendered.” (Lazar, supra, 12 Cal. 4th at 645 [internal quotation marks and ellipses omitted).]

Plaintiffs allege Defendant intentional misrepresented to them that if there were issues with the addition, he would repair those defects. He also falsely stated that the addition was a one-bedroom, one-bathroom apartment with its own entrance. Defendant intended for Plaintiffs to rely on these statements to enter into the lease agreement. Plaintiffs in turn were harmed by the misrepresentation by entering into the lease, leasing a substandard premises, and being subjected to Defendant’s retaliatory conduct when Defendant was notified of a need to remedy the addition’s conditions. (Compl., ¶¶ 47-54.) Further, Defendant’s misrepresentations were intentional, malicious, and done in bad faith. (Compl., ¶55)

In support of the allegations, Soto provides in her declaration that Defendant built the addition, and induced Plaintiffs to rent it through his false statements about both its condition and his willingness to make any necessary repairs. (Soto Decl., ¶¶5-7.) Defendant argues Plaintiffs’ evidence is insufficient to meet the clear and convincing standard for punitive damages. He also submits his declaration stating that he did not build the addition and he did not know about the damage to the water heater. (Ramos Decl., ¶¶4,6.)

Defendant’s argument that Plaintiff has not provided sufficient evidence is unconvincing. The Order to Comply from the LABSC, coupled with Plaintiff’s detailed declaration demonstrates serious concerns with the addition. Furthermore, Soto declared Plaintiff told her he would fix any issues with the addition, and he has refused to do so. Defendant does not dispute that he knew the addition was unpermitted, that Soto told him information regarding the plumbing issues and the cockroach infestation, or that he did not remedy those issues. He only disputes awareness of the heating problem. (Ramos Decl., ¶6.) As previously discussed Defendant’s argument that he did not build the unit does not change the court’s opinion.

Accordingly, the motion is granted.