TENTATIVE RULING

Cross-Defendant Rexford Manor Homeowners Association’s Demurrer to David Schwarcz’s Cross-Complaint is OVERRULED.

Cross-Defendant Rexford Manor Homeowners Association’s Motion to Strike David Schwarcz’s Cross-Complaint is GRANTED without leave to amend as to Defendant/Cross-Complainant David Schwarcz’s requests and prayers for punitive damages and DENIED as to Defendant/Cross-Complainant David Schwarcz’s requests and prayers for attorney fees.

Cross-Defendant Rexford Manor Homeowners Association shall file and serve an answer to Defendant/Cross-Complainant David Schwarcz’s Cross-Complaint within ten (10) days of entry of this order. (Cal. Rules of Court, rule 3.1320(j).)

Cross-Defendant Rexford Manor Homeowners Association to give notice. 

REASONING

Request for Judicial Notice

Cross-Defendant Rexford Manor Homeowners Association (“the HOA”) requests judicial notice of its Articles of Incorporation and its Statement of Information from the California Secretary of State, excerpts of the HOA’s conditions, covenants, and restrictions (“CC&Rs”), and the cross-complaint filed in this action. The HOA’s request is GRANTED pursuant to Evidence Code section 452, subdivisions (c) and (d).

Legal Standard

“[A] demurrer tests the legal sufficiency of the allegations in a complaint.” (Lewis v. Safeway, Inc. (2015) 235 Cal.App.4th 385, 388.) A demurrer can be used only to challenge defects that appear on the face of the pleading under attack or from matters outside the pleading that are judicially noticeable. (See Donabedian v. Mercury Ins. Co. (2004) 116 Cal.App.4th 968, 994 [in ruling on a demurrer, a court may not consider declarations, matters not subject to judicial notice, or documents not accepted for the truth of their contents].) For purposes of ruling on a demurrer, all facts pleaded in a complaint are assumed to be true (Aubry v. Tri-City Hosp. Dist. (1992) 2 Cal.4th 962, 967), but the Court does not “assume the truth of contentions, deductions, or conclusions of fact or law” (Moore v. Regents of University of California (1990) 51 Cal.3d 120, 125).

Further, the court may, upon motion, or at any time in its discretion, and upon terms it deems proper, strike any irrelevant, false, or improper matter inserted in any pleading. (Code Civ. Proc., § 436, subd. (a).) The court may also strike all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court. (Code Civ. Proc., § 436, subd. (b).) The grounds for a motion to strike are that the pleading has irrelevant, false, or improper matter, or has not been drawn or filed in conformity with laws. (Code Civ. Proc., § 436.) The grounds for moving to strike must appear on the face of the pleading or by way of judicial notice. (Code Civ. Proc., § 437.)

Leave to amend must be allowed where there is a reasonable possibility of successful amendment. (See Goodman v. Kennedy (1976) 18 Cal.3d 335, 349 [court shall not “sustain a demurrer without leave to amend if there is any reasonable possibility that the defect can be cured by amendment”]; Kong v. City of Hawaiian Gardens Redevelopment Agency (2002) 108 Cal.App.4th 1028, 1037 [“A demurrer should not be sustained without leave to amend if the complaint, liberally construed, can state a cause of action under any theory or if there is a reasonable possibility the defect can be cured by amendment.”]; Vaccaro v. Kaiman (1998) 63 Cal.App.4th 761, 768 [“When the defect which justifies striking a complaint is capable of cure, the court should allow leave to amend.”].) The burden is on the complainant to show the Court that a pleading can be amended successfully. (Blank v. Kirwan (1985) 39 Cal.3d 311, 318.)

Third Cause of Action: Breach of Contract

To state a cause of action for breach of contract, Plaintiff must be able to establish “(1) the existence of the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach, and (4) the resulting damages to the plaintiff.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821.)

If a breach of contract claim “is based on alleged breach of a written contract, the terms must be set out verbatim in the body of the complaint or a copy of the written agreement must be attached and incorporated by reference.” (Harris v. Rudin, Richman & Appel (1999) 74 Cal.App.4th 299, 307.) In some circumstances, a plaintiff may also “plead the legal effect of the contract rather than its precise language.” (Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 198-199.)

The HOA argues that the allegations state that the unit owner, Defendant/Cross-Complainant David Schwarcz (“Schwarcz”) was given notice of mold from the tenant, which was report to HOA management, the HOA repaired the roof, and the CC&Rs state that the owner is responsible for repairing the interior of his unit. Schwarcz claims that the leak in the roof was due to a failure to maintain the roof, which breached the CC&Rs. (See Cross-Compl. ¶ 17.) The Court cannot conclude based on the facts in the cross-complaint that the roof was Schwarcz’s responsibility because it is a matter of fact whether the roof can be considered part of the unit such that Schwarcz was responsible for the repair. Thus, the HOA’s demurrer to the third cause of action is OVERRULED.

Fifth Cause of Action: Breach of Fiduciary Duty

“The elements of a cause of action for breach of fiduciary duty are the existence of a fiduciary relationship, breach of fiduciary duty, and damages.” (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 820.)

The HOA demurs to this claim on the ground that the allegations do not show bad faith on the part of the HOA because the owner is responsible for repairing the interior of his unit, and there is a presumption that the HOA acted in good faith under the business judgment rule. First, Civil Code section 4775, subdivision (a)(1), imputes a duty on the HOA to maintain common areas unless the CC&Rs expressly state otherwise, and the CC&Rs here require in section 9(i) that the HOA manage the common areas. (Cross-Compl. ¶ 14, Ex. 1, at § 9(i).) Section 1(g) of the CC&Rs defines common areas to include the entire premises excluding units, which is echoed in Civil Code section 4095. (Cross-Compl. ¶ 14, Ex. 1, at § 1(g).) Whether the HOA repaired the roof after the leak is not a basis to strike this claim because Schwarcz claims that the leak in the roof was due to a failure to maintain the roof, which breached the CC&Rs. (See Cross-Compl. ¶ 17.) The Court cannot conclude based on the facts in the cross-complaint that the roof was Schwarcz’s responsibility because it is a matter of fact whether the roof can be considered part of the unit such that Schwarcz was responsible for the repair.

As to whether the business judgment rule applies here, “[t]he business judgment rule is a judicial policy of deference to the business judgment of corporate directors in the exercise of their broad discretion in making corporate decisions.” (Everest Investors 8 v. McNeil Partners (2003) 114 Cal.App.4th 411, 429.) The Court is not convinced that the HOA’s judgment entails a failure to comply with the CC&Rs and a requirement to repair common areas. Accordingly, the HOA’s demurrer to the fifth cause of action is OVERRULED.

Motion to Strike

The HOA moves to strike Schwarcz’s request for punitive damages in paragraphs 50 and 57 and prayer for relief on page 14. Punitive damages may be recovered upon a proper showing of malice, fraud, or oppression. (Civ. Code, § 3294, subd. (a).) “Malice” is defined as conduct intended to cause injury to a person or despicable conduct carried on with a willful and conscious disregard for the rights or safety of others. (Turman v. Turning Point of Cent. Cal., Inc. (2010) 191 Cal.App.4th 53, 63.) “Oppression” means despicable conduct subjecting a person to cruel and unjust hardship, in conscious disregard of the person’s rights. (Ibid.) “Fraud” is an intentional misrepresentation, deceit, or concealment of a material fact known by defendant, with intent to deprive a person of property, rights or otherwise cause injury. (Ibid.) Conclusory allegations, devoid of any factual assertions, are insufficient to support a conclusion that parties acted with oppression, fraud, or malice. (Smith v. Superior Court (1992) 10 Cal.App.4th 1033, 1042.)

Schwarcz argues he is entitled to punitive damages based on the HOA’s failure to repair the roof, causing him to sustain damage to his unit and financial hardship. It is clear from the complaint and cross-complaint that Schwarcz was not residing in the unit, thus, he is essentially asking the trier of fact to award him punitive damages based solely on his need to expend money based on the HOA’s failure to repair the roof. While this conduct may serve as the basis for damages, the Court cannot conclude that the conduct constitutes malice, oppression, or fraud, particularly when Schwarcz was not residing in the unit so he was not required to relocate and he was not exposed to mold, i.e., it appears an entitlement to punitive damages is a claim that can be maintained by the tenants alone. A mere negligent failure to repair the roof or breach of fiduciary duty to do so without more than an economic loss will not sustain punitive damages under these facts. Thus, the HOA’s motion to strike is GRANTED without leave to amend as to Schwarcz’s request for punitive damages.

An award of attorney fees is proper when authorized by contract, statute, or law. (Code Civ. Proc., §§ 1032, subd. (b), 1033.5, subd. (a)(10).) The HOA argues that Schwarcz’s request for attorney fees in paragraphs 24, 25, and 26 and prayer for relief on page 13 are improper because there is no basis for attorney fees because there is no provision for such fees in the CC&Rs. Schwarcz argues that his request for attorney fees is proper under Civil Code section 5975, subdivision (c), which allows an award of attorney fees in an action to enforce the governing documents. The HOA counters that this allegation is not included within the body of the cross-complaint, but the Court finds it unnecessary to amend the cross-complaint to so state when Schwarcz has merely alleged an entitlement to attorney fees, i.e., he has not alleged an improper basis, such as contract, and his entitlement to fees per statute may be determined at a later juncture. Accordingly, the HOA’s motion to strike is DENIED as to Schwarcz’s request for attorney fees.